Positive outlook on cement sector, Saudi Arabia

Positive outlook on cement sector, Saudi Arabia
Published: 08 May 2006

According to data currently available, writes Global Investment House of Kuwait, projects currently under execution in the GCC amount to about $620bn. Out of these, Saudi Arabia is believed to account for about 29.3%, or $182bn worth of projects. Of these about $80bn (or over 44%) worth of projects are believed to be in the civil segment. Civil projects – covering infrastructure and property construction segments – are known to be highly cement-intensive in nature. The high proportion of the proposed investments in the civil segment points towards a steady and sustainable cement demand in the country moving forward. Thus, there is now greater visibility on the future cement demand front in the country. 
 
 On the supply side, announcements have been made by various incumbent as well as new cement companies for expansion of existing capacities and/or setting up new capacities. New clinker capacities of about 21.3mt and cement capacities of about 22.0mt are believed to be coming up in the Kingdom in the coming 2-3 years by way of expansions as well as greenfield projects. 
 
 Over the medium-term, the cement demand in Saudi Arabia is expected to be robust in view of the massive investments planned all across the country. Assuming that all the investment projects valued at $182bn announced in Saudi Arabia so far are implemented, we project a cement demand growth at a CAGR of about 12% in volume-terms during 2005-’08.  [Global Investment House]