High prices in Saudi

High prices in Saudi
17 May 2005

The Saudi Ministry of Commerce has been forced to intervene in the cement market to bring the prices down. Reaction to the move by the Ministry of Commerce was mixed. Distributors were apparently comfortable that the pricing strategy helped the market rather than harmed it.
The market is divided into two parts, a part that sells a bag of cement for SR14 per bag to buyers with permits and a part that sells for SR18 in the black market for buyers without permits to build.The distributors allow buyers and consumers with a building permit to buy 100 bags of cement for the price of SR14 each per day in addition to paying the transportation cost. Other buyers and small builders without permits, are obliged to pay upward of SR18 a bag on the black market.

Sultan Al-Kahtani, a customer, said that there is enough cement in the market but the transporters of the cement have raised their prices between SR30 and SR50 to SR100 to SR150 per load. Muhammad Al-Harbi, manager of the branch of the Ministry of Commerce and Industry in Makkah told the Okaz newspaper that the idea of asking for building permits from distributors is to organize the sales of cement to make sure that the cement is sold only to consumers and not to distributors.

Al-Harbi said that the supply of cement in the market falls short of the demand. He said that there are teams from the Ministry of Commerce at all sales points to monitor the market in an attempt to prevent the existence of a black market and to protect consumers. He said that those found playing with the prices will be stopped and punished and the ministry will determine the punishment. Reports suggest that the cement companies anticipate that it will be six months before the shortages are eliminated.

Published under Cement News