Cement prices in Saudi Arabia will remain flat for 2008 and most of 2009 but are expected to fall by up to five per cent a year until 2013 on much higher output, a Saudi investment firm said in a report on Wednesday.
Annual cement production in the kingdom is expected to rise to 69.9Mt by 2013 from 23.5Mt in 2005, helped by an upgrading of existing current production facilities and the establishment of new companies, Jadwa Investment said.
Most of the new plants are expected to operate at or above design capacity, as plants are usually built with 10 to 15 per cent excess capacity, the report said.
"The huge increase in capacity under way combined with a recent ban on exports is expected to exert considerable downward pressure on cement prices in the years ahead," the company said.
The export ban was introduced in June after shortages in cement due to large volumes of exports, caused prices to soar.
More than 12Mt in new production capacity was added last year and a further 7.8Mt will be added in 2008.
The capacity increase should slow after 2010 and production is expected to stabilise after 2013 when the second batch of new projects is completed, according to the report.