Saudi slowdown set to continue

The current slowdown being seen in the Saudi Arabian cement market due to labour shortages is set to continue in the short-term, NCB Capital has cautioned.

Saudi cement sales declined by 15 per cent in November 2013 YoY following the expulsion of 2m illegal expatriate labourers. The crackdown led to suspension of construction projects and delays in the transportation of cement and as a result, NCB expects the market to be affected over the next 4-6 months

Last week, Zamil Al Mugren, chairmn of the Saudi committee for national cement companies, said 2013 sales growth would be down to about three per cent following a 10 per cent advance the year before. Analysts at NCB, meanwhile, have lowered expectations for 2013 sales from 56Mt to 53Mt.

However, the investment bank remains positive on the long-term outlook for Saudi Arabian cement demand, particularly in light of the increase in construction contract awards. It noted a 52 per cent YoY rise in contract awards in the first nine months of last year to US$6.72bn.