Saudi cement clinker mountain
Following the export ban on cement and clinker enacted by the Saudi government in April last year, Saudi producers have been busy stockpiling excess clinker production - a re-run of market conditions last seen in the 1990s. As at the end of December 2008, this clinker mountain had risen to over 8Mt and with stocks being added at about 1Mt per month, its not clear how long Saudi producers will be be able to continue storing such huge amounts, and some, if not all, are believed to be pressing the Saudi government for an early end to this export ban. The only country unaffected is its neighbour Bahrain which has had an uninterrupted supply of cement to service two Saudi-owned trade and distribution operations.
When such a Saudi export ban is removed, and it could arrive anytime soon according to local industry watchers, the repercussions on regional export trades will be significant. Qatar will be one major export destination with the Saudi’s likely to achieve sales of over 2Mt over the next 12 months. Kuwait is another destination while producers in the UAE are said to be fearful of the expected arrival of unwanted clinker and cement from producers just over the border at a time when the local market there is experiencing a sizeable drop in local demand. One local Saudi producer CemNet contacted, Southern Province Cement, has over 1.1Mt of clinker in storage and once the ban is lifted is expected to target markets in Yemen, Sudan and East Africa from its neighbouring deepwater port of Jizan.
The more worrying aspect, apart from a flood of clinker on the market is the price Saudi producers could in theory offer its clinker for. We are offering no prizes, but with almost free energy and a resultant clinker production cost of around US$12 per tonne at many local factories, alternative supplies of Chinese clinker, now reported back down at US$32 per tonne, could begin to look expensive. We watch and wait. Published under Cement News
