Saudi Arabia’s cement industry, the largest in the Middle East, has largely expanded this year and growth it expected to continue due to a sharp rise in construction projects, the Gulf country’s largest bank said on Tuesday.
Contract awards through the first three quarters of 2011 reached SR179.5 billion, a staggering 125% increase over the same period last year, National Commercial Bank (NCB) said its weekly bulletin, sent to Emirates 24/7.
Production in September rose by 27% compared to levels in September of 2010, thereby reaching 3.2 million tonnes, it said.
As for clinker production, the 13 locally operating companies produced nearly 3.41 million tonnes during the same month, Over the first nine months of 2011, cement production has risen by 11.8% while clinker production increased by 8.5%, the report showed.
Furthermore, cement exports are still on the rise climbing by 5.8% over the last three quarters, representing Al-Jouf’s recent regional penetration, it said.
“Local deliveries are at 97% and 96% for cement and clinker productions, respectively, highlighting the short supply experienced in the market…. on the equity front, the cement sector rose an impressive 20.3% YTD. As the third quarter came to an end, corporate earnings have reflected positively.”
Citing balance sheets, the report said the10 listed cement companies have collectively generated SR982.2 million during the third quarter of this year, expanding net profits by around 26.8%.
“The latest addition to the cement sector, Hail Cement, witnessed a 1.3x over subscription, emphasizing the confidence of investors in the industry,” it said.
“The Saudi government is planning to award more project licenses to accommodate the growing demand in the domestic market, which will help boost the industry’s competitiveness.”
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