Cement demand hit by Saudi Building Code, new entrants in Western Province intensify competition: Yanbu Cement CEO

Ali Al-Ayed, CEO of Yanbu Cement

The demand for cement was hit by several factors, including slow growth in mega projects and housing investments, Ali Al-Ayed Chief Executive Officer (CEO) of Yanbu Cement Co. told Argaam in a telephone interview.

In addition, the issuance and application of the Saudi Building Code (SBC) impacted demand, as real estate developers and individual investors attempt to understand its requirements.

Average cement selling prices in the Western Province dropped nearly 19% to SAR 155-SAR 150 per ton in Q3 2021, when compared to the second quarter of the year, Al-Ayed said.

The decline in selling prices was mainly attributed to lower demand and higher supply, which led companies to maintain their market shares, Al-Ayed noted. The entry of companies from outside the Western Province intensified competition and led to a significant drop in prices.

Yanbu Cement’s clinker inventory decreased from 4.8 million tons at the end of 2020 to 3.4 million tons as of Sept. 30, 2021. The company exported 365,000 tons of clinker and 80,000 tons of bulk cement to the African market and Yemen, mainly in the third quarter of the year.

Elsewhere, Al-Ayed added that the performance of Yanbu Cement’s fourth production line is currently in the testing phase, expecting the project to significantly reduce clinker production costs and boost capacity by nearly 500 million tons on a daily basis.

Replying to a question about cement demand, Al-Ayed expected a marginal rise in demand by the end of this year amid lower prices, due to oversupply and high inventory.

Yanbu Cement posted a net profit of SAR 149.7 million for the first nine months of 2021. Its third-quarter net profit stood at SAR 36.4 million, Argaam reported.