Overcapacity will push down cement price in Saudi Arabia from SAR255 (Dh250) to SAR200 per tonne in the next five years, according to a recent HSBC Saudi cement sector report.
The eight Saudi incumbent cement operators are ramping up capacity just as six new players enter the market – and the government has banned exports, as well as setting a ceiling on prices in Saudi Arabia. Between 2002 and 2007, cement consumption rose to 6.5Mta.
By 2010, there will be an additional 13.5Mta of capacity, said the report. The report estimates the capacity of the market will rise from 35mtpa of clinker at end-2007 to 48.5Mta in 2010. The regions with the highest demand – western, central and eastern regions – have two incumbent players apiece, while the northern and southern regions have one each.
Saudi has 13 provinces, but the report has subdivided it into five regions. The six newcomers were mostly licensed in 2005. Four have already started production, one is expected to launch production in 2009 and the last in 2010.