Government spending on new projects in Saudi Arabia is driving the growth of the kingdom’s cement industry in 2009, but rising inventories and strict controls on exports still threaten the sector, HSBC Saudi Arabia said Friday in a report.
"Cement sales in KSA (Kingdom of Saudi Arabia) have been strong this year but we have been reluctant to adopt a positive stance on the sector," the bank said, adding that it expects demand for cement to "remain strong".
Local demand for cement has picked up in recent months, with sales increasing 23 percent year-on-year in May compared to the 15 percent growth rate seen in the first four months of 2009. This spike in sales is mainly driven by the rise in construction contracts, which have tripled in value this year, HSBC said.
"This pace of growth has not been replicated elsewhere in the GCC," the bank said. Saudi Arabia has stepped up spending amid the global recession and has budgeted $400 billion for new projects until 2013.