Overview of the Saudi Cement Sector…
Saudi Arabia has become one of the fastest expanding economies in the region with a real economic growth rate of 5% over the last five years compared with an average rate of 1.4% in the previous decade. The government is in an enviable position of being able to invest its high oil revenues in infrastructure. As a result, the demand for cement has been continuously increasing over the past years. Saudi Cement Co., Yamama Cement Co. and Southern Cement are at the top in terms of market capitalization in the Saudi Cement Sector. They hold about half of the total market capitalization of the eight listed companies, as of June 25, 2008. The current combined total capacity of cement and clinker of these eight companies was 32.90 MM tons and 28.50 MM tons respectively in 2007. Yamama Cement, with cement and clinker capacities of 6.30 MM tons and 6 MM tons respectively, is the largest cement Company in terms of production capacity and the second largest producer in terms of production in Saudi Arabia. The total cement production of the 8 listed companies in Saudi Arabia reached 30.28 MM tons in 2007, up by a healthy 12% as compared to 27.05 MM tons, which was recorded in 2006. Much of the cement demand in Saudi originates from the central, eastern, and western regions.
Rising Cement Exports from Saudi Arabia…
The total export of cement from Saudi Arabia increased to 3.57 MM tons in 2007 from 1.67 MM tons in 2006. At present, there are a total of 5 cement companies, which are exporting cement from the country. Out of these five, Saudi Cement and Eastern Cement are the major cement exporters, with exports of 1.15 MM tons and 1.12 MM tons respectively, in 2007. It is worth noting that the government prohibited recently the export of cement following growing complaints by contractors and individuals that traders are stacking supplies for exports to make more profit. On the other hand, it should be noted that the imports of cement or clinker into Saudi Arabia in 2007 were almost negligible.
The Booming Saudi Economy…
With over 25% of the world’s conventional oil reserves, Saudi Arabia is the largest Arab economy. Although efforts have been made to diversify Saudi Arabia's economy, it remains heavily dependent on the Oil Sector and will continue to be so in the foreseeable future. Private Non-oil Sector contribution to GDP has increased over the past decade, but oil and oil derivatives still account for 90-95% of Saudi export earnings, 75% of budget revenues and about 30-35% of its GDP. Non-oil Sector grew by 8% in 2007 and soaring oil revenues over the recent years have created significant budget and external surpluses. As a result, the Saudi economy has witnessed an unprecedented rise in infrastructure activities in the past few years. This has created a huge demand for cement in the Kingdom. The rising population of the youth and the robust growth in the Tourism Sector are also favorable to the Cement Sector.


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