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RIYADH: Saudi Arabia’s cement sector underperformed as rising production costs and weak demand led to lower sales and production in April coinciding with Ramadan.

According to data collected by Yamama Cement Company, sales of seventeen Saudi cement factories declined by 39%. It rose to 3 million tons in April 2022 from 4.97 million tons in March.

That compares with a 28% drop from April last year, which included three weeks of Ramadan, compared to thirty days this year.

Madinah, Al-Qassim, Al-Safwa, Najran and Al-Yamamah cements witnessed the largest declines month-on-month in April – 57%, 46%, 46% and 45%, respectively. (one missing). A comparison of cement production and sales within Saudi companies between the first four months of 2022 and 2021 reveals an overall negative growth of 14% in production and a negative growth of 12% in sales.

This compares to a 10.9% and 13.5% increase in production and sales respectively in the first four months of 2021 compared to the same period in 2020.

Yamama Cement is the only company that recorded year-on-year growth in the first four months of 2022. The data shows a 49% increase in production to 2.4 million tons and a 54% increase in domestic sales of 2.4 million tons.

Safwa and Tabuk cement plants recorded negative production growth during the same period, but increased sales by 1.3% and 13%, respectively.

Yamama Cement Company recorded the highest share in total production and sales in the first four months of this year with 14%, followed by Saudi Cement Company and Southern Cement with 11%.

Aside from rising energy prices which account for about 30-40% of the total production cost, the kingdom’s cement sector has been hit by the slowdown in construction activities due to labor shortages caused by travel restrictions related to the COVID-19 pandemic.

Clinker production from all Saudi companies increased by 8.5% in the first four months of 2022, reaching 18.8 million tons. Najran Cement Factory alone increased its production by 98%, followed by Yanbu Cement which increased its production by 60%.

Riyadh Cement and Al-Jawf came at the bottom of the ranking, recording the slowest clinker production by 42% and 30%, respectively.

Saudi cement factories sell almost all locally produced cement. However, the Saudi Cement Company became the largest exporter of cement by 199,000 tons, which represents nearly 60% of the total exports of all factories in the Kingdom.

Yanbu Cement, Saudi Cement and Arabian Cement accounted for 75% of the total clinker exports, or 1.9 million tons, in the first four months of 2022.

In April 2022, cement stocks rose 7.3% year-on-year compared to 8.9% in March. This also compares to year-on-year declines in April and March 2021 – at 11.8% and 15.1%, respectively.

Cement plants in Qassim and the Northern Region recorded the largest increase in cement stocks in April 2022 (69% and 51%, respectively).

According to Aljazira Capital analysts, the number of expats in the labor market witnessed a net annual decrease of 66 thousand workers in 2021. However, recent data shows a quarterly net increase of 267 thousand expats during the fourth quarter of 2021, the first quarter of the year. An increase since the same period in 2020.

Increased construction activity stemming from the Red Sea Development Company, Amala, NEOM and Qiddiya development projects in Saudi Arabia is also expected to lead to a recovery in the local cement industry.

Cement manufacturers are investing in new infrastructure to improve production efficiency and reduce energy consumption. This change also comes at a time when Saudi Arabia was added to it More than a hundred countries have committed to achieving “net zero emissions” by 2060.

This text is a translation of an article published on Arabnews.com

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