RIYADH, Apr 17 (Arab News): A surge in construction activities due to The Red Sea Development Co., AMAALA and other development projects in Saudi Arabia such as NEOM and Qiddiya is expected to drive the recovery of the cement industry after the demand dwindled last year and early this year on account of the pandemic.
"The industry will be positively affected by renewed construction in the north, with The Red Sea Project, and residential developments. The effect won't be immediate but will reflect on the long haul, until 2030," said Omar Hatoum, general manager of Saudi concrete products manufacturers, SACEP, in an interview with Arab News.
In terms of residential developments, he said the Kingdom has already done a lot in past years. "This means the impact of any new developments on the sector will be spread over the next several years," he explained. "These projects will translate into a gradual growth in the cement industry."
Mazen Al-Sudairi, head of research at Al Rajhi Capital, expects construction activity to boom on the back of rising commodity prices that have soared significantly this year, according to a cement report released by the asset management firm in late March.
"We also expect the inflationary trend to cap cement demand, as we expect cement sales will be flat to negative in 2022, compared to 2021, and constrain an increase in cement prices," he said.
Although Al-Sudairi sees the financial performance of the cement sector improving, he expects improvement to be capped by weak demand and pricing conditions.
The cement market in Saudi Arabia is concentrated with 17 market players in the country, according to Argaam.
Saudi-based Al-Emar Group Chairman Abdullatif Saleh Alsheikh points out that the country's cement companies are currently operating at around 60 per cent of their total capacity. "This leaves room for growth as companies reach full production potential," added Alsheikh.
He does not see any new cement factories coming up soon, although some could open branches in the north to meet fresh demand there.
© 2025 - All Rights with The Financial Express
