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Local producers warn of Saudi cement black market

Low inventories, high demand leave producers unable to handle demand

Local Saudi producers are worried about the growing black market for cement (Getty Images)
Local Saudi producers are worried about the growing black market for cement (Getty Images)

RELATED ARTICLES: Saudi cement sector posts 16% annual growth | The UAE ministry will not raise cement prices | Bahrain and Saudi fall out over cement prices

A black market in Saudi Arabian cement is growing in the Kingdom’s western and southern regions, as prices continue to increase, local cement producers said on Saturday, citing concerns over their low inventories and inability to cope with the demand.

With some cement producers’ having low inventories, the imbalance between supply and demand is likely to continue in a number of areas, Ahmad Zugail, the chief executive of Najran Cement said, in a report by the Saudi newspaper Al Riyadh.

Zamil Al Mokrin, general manager of Eastern Province Cement Company said that he expected total cement demand to reach 50 million tonnes this year. He attributed the rise in prices to a fuel supplies shortage at certain cement companies.

He added that growing demand from new residential and governmental projects was also playing a part in the rise in prices.

“Moreover, the rush of consumers to overbuy quantities beyond their need raised demand further and prompted some distributors to exploit the situation and hike prices and create a black market,” Mokrin added, according to the newspaper.

Conversely, the Saudi Arabian cement sector said earlier this year that it had recorded sales growth of 16%, the highest level in more than a year.

Domestic cement sales grew to 4.2 million tonnes in April, compared to 3.61 million tonnes in the same period last year, NCB Capital analysts said. Private projects, mainly school and residential, are the main drivers behind the increase in demand.

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