Saudi Arabia recorded an increase in cement sales in the first two months of this year as government investments in infrastructure projects spurred construction, reports Business Intelligence Middle East.
Sales rose 15% to 5.6Mt, compared with the year-earlier period, HSBC Holdings said in an e-mailed report. “This shows that construction activity continues to remain robust,” HSBC said.
The government prohibited in June the export of cement to help reduce prices. Cement inventories increased 6% this year, while clinker stock rose 11%, HSBC said.
“Without the lifting of the export ban, it seems inevitable that the pressure of rising inventories will lead to price declines,” HSBC said. “With local sales seemly robust, we see no reason for the authorities to relent on the ban.”
However, Business Emirates 24/7 reported that Saudi manufacturers plan to write to the Custodian of the two Holy Shrines King Abdullah bin Abdulaziz to intervene to lift the ban on export of cement, according to a report in Al Hayat.
The current surplus amounts to nine million tonnes and it will go up to 20Mt by the end of the year, said Safar Mohammed Dhafar, a member of the board of the Southern Province Cement Company.
He added that sales have fallen since the ban, which has pushed the surplus to 9Mt compared with 1.5Mt during the same period last year.
Some companies are expected to stop some of their production lines and to lay off part of their labour.