Saudi cement sales fall amid Ramadan slowdown

The Ramadan lull in construction in Saudi Arabia dampened the recovery in cement sales which was gaining steam over the summer, but despite the decline in monthly growth, the sector is still showing double digit annual growth, a leading bank said Saturday.

Sales of cement increased 16.9% to 2.12 million tons in September compared to a year earlier, but the industry saw a decline of 34.2% in sales compared to August, NCB Capital, the investment banking arm of the government-owned National Commercial Bank, said in an emailed report.

As a result of a subdued market, both domestically and for the limited export market, inventory of clinker stock has climbed 10.2% to 10.2 million tons in September compared with a month earlier. "Yamama Cement remained the only company reporting a decline in the clinker stock over July-Sept, while all the other company's reported a rise in their stock levels," the bank said.

Last year Saudi Arabia banned the exportation of cement due to rising prices domestically, a move which hampered the profitability of the sector and focused on sales in the kingdom. The ban was relaxed this year and four companies have been allowed to resume exports: Saudi Cement, Eastern Province Cement, Northern Region Cement and Tabuk Cement.

Exports were rising over the summer but the Ramadan slowdown also affected sales in September. The sector exported 82,000 tons in September versus 85,000 tons in September 2008, and 137,000 tons in Aug 2009, the bank said.

At the end of the third quarter, Northern Region Cement accounted for 38.4% of the exports. But the company's exports declined to 23,000 tons in September from 62,000 tons a month earlier when it posted the highest sales outside the country since the cement export ban was eased in May 2009, NCB Capital said.

Saudi Arabia has 12 cement companies that produce about 49 million tons annually, the bank said.

From China Cement (2009-11-2)