10/05/2009
During a conference of Saudi cement companies hosted by Asharqia Chamber on May 9th, Eid Al-Qahtani, Executive Director of the Saudi Exports Development Center, said the Saudi Government would soon lift the export ban on cement following assurances from factories that the prices would be kept low. "The issue of lifting the export ban on cement was subject to the issue of price stability. Cement prices in the Kingdom have been stable for some time now and that is what will prompt the government in removing the export ban," said Al-Qahtani.
Abdullah Mohammed Al Sayah, President of UAE Cement Factories and Producers Group, told Emirates Business that an agreement has been reached between the UAE and Saudi producers that there would be no dumping of excess cement from Saudi into the UAE market. "Everything will be based on the market situation. They will export to the UAE when there is a genuine demand. If local production in the UAE can meet the existing demand, I do not see any reason for concern," said Al Sayah. He refused to further elaborate on the issue. "We are in constant touch with the Saudi producers as well as the UAE Ministry of Economy on production availability and price issues."
Mustafa Gorgunel, General Manager at Union Cement Norcem said if the Saudi Government decides to lift the export ban, it would be bad news as far as UAE factories are concerned. "The impact will, however, be minimal. Initially the import will start with cement bags as there are no complications involved. Import of bulk cement will, however, involve the use of port and container facility. It all depends on how much the Saudi firms are going to price their exported cement. At present, factories in the UAE are selling cement at Dh14 per bag," said Gorgunel. UAE's cement demand, compared to previous estimates has fallen. Earlier estimates had indicated the demand for cement in the UAE is likely to touch 26.2 million tonnes by 2011.
Reportedly, the Saudi Ministry of Trade and Industry has entered into an agreement with cement manufactures to fix the local price of a bag of cement at 10 riyals in exchange for the lifting the ban on exports. Saudi Arabia introduced the ban on cement exports in June last year to ease the supply bottlenecks amid increasing demand across the region. Since the import restrictions have been imposed several Saudi firms have reported quarterly losses.
Last week Saudi Cement Co. , the country's second-largest cement producer, said the company's first-quarter profit fell 12.3 percent following the ban. The company's earnings during the first quarter of 2009 declined to SR152 million. Demand for cement in Saudi on the other hand has jumped to a monthly record high in March 2009.
According to the NCB Capital report, the 12 cement companies in the Kingdom have an estimated annual production capacity of approximately 48 million tons. Total dispatches (including exports) stood at 3.46mt versus 2.89mt in January 2009 and 2.94mt in February 2009. The 3.38mt of cement/clinker sales in Saudi last month "is the highest monthly sales reported in the country," the report said. The sales last month were up 13.6 percent year on year and 17.6 percent month on month. Also export sales from Saudi continue to remain below the 100,000 tons mark. Total domestic sales of companies (including listed and private) stood at 3.38mt versus 2.87mt in February 2009 and 2.97mt in March 2008. Cement sales outside the Kingdom stood at 77,000 tons in March 2009, as against 507,000 tons in March 2008 and 64,000 tons in February 2009. The 85 percent year-on-year decline is explained by the government restriction on sale of cement abroad.
Qatar and Bahrain will be the main beneficiaries of the removal of export ban. Prior to the export ban Qatar had been importing about 150,000 tons of cement and clinker every month (against the 100,000 ton quota currently allowed by Bahrain. The special weekly cement export quota of 25,000 tons for Bahrain, if fully utilized, should result in sales of 100,000 tons per month, the report said.
