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Saudi cement sales are higher, but prices weaken
Cement sales in Saudi Arabia continue to show positive growth, but are being discounted as a slowdown in the market continues.

According to new research from NCB Capital, sales for the month of February 2015 were 6.5% higher than in February 2013 and 9.7% higher than February 2014 when the market was impacted by a labour shortage caused by a government immigration crackdown.

Sales were 3.3% lower than in January 2015, but this was due to the shorter working month.

NCB Capital said the increase was led by smaller players in the market like Najran Cement and Aljouf, who are continuing to sell at discounts in the busy Western and Central regions.

"We believe larger players have also started offering discounts, however, at different magnitudes."

The increased sales meant that clinker stocks, which were at record highs as firms had started to stockpile, fell for the second month in a row to 20.4 tons.

Saudi Arabia has 15 cement producers, with Saudi Cement Co possessing the greatest market share, with 8.8% of the market. It is followed by Southern Province Cement (7.7%) and Yanbu Cement (6.3%). The latter has just published Q1 2015 results which revealed a 12.5% fall in net profits to $55.2m, which has been attributed to lower-than-expected selling prices.

"We believe the company began offering discounts as inventory reached all-time highs due to a continued slowdown in demand," NCB Capital said. "Selling prices could have been as low as SR230/ton. This compares to our estimates of SR248/ton, 1Q14 of SR250/ton and 4Q14 of SR242/ton."

The amount of cement being exported has increased by one-third (3.3%) over the past year - from 48,000 tons in February 2014 to 64,000 tons this year.
UAECEMENT.COM - Apr, 08,2015



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