Displaying items by tag: Qassim

Saudi Arabia: Cement sales increased by 12% year-on-year in the fourth quarter of 2024, reaching 14.87Mt, Arab News reports. Sales were primarily driven by domestic demand, which accounted for 96% of total sales. Exports contributed the remaining 4%, according to data from Al-Yamama Cement. For the full year, cement sales grew by 3.7% to 51.2Mt.

Al-Yamama Cement led the domestic market in the fourth quarter of 2024, with a 13% share and sales of 1.83Mt, up by 22% year-on-year. Qassim Cement, after acquiring Hail Cement, held an 11% share with 1.63Mt of sales. Yanbu Cement, Southern Cement, and Al Jouf Cement followed.

During the same period, Saudi Cement dominated in exports with 0.49Mt, representing 80% of total shipments and a 71% year-on-year increase. Clinker production grew by 7% year-on-year in the fourth quarter of 2024 to 14.9Mt, while clinker exports fell by 28% to 1.15Mt.

Amr Nader, CEO of cement consultancy A3&Co, said “These figures may not fully align with the anticipated surge in demand from ambitious infrastructure projects. Megaprojects such as NEOM, the Red Sea project, and FIFA World Cup-related developments require vast quantities of construction materials. The maximum anticipated demand in the next five years is 78Mt/yr.”

Saudi Arabia: The crowded cement sector in Saudi Arabia is experiencing tensions due to its varying market shares, according to Majed Al Osailan, vice chair of the National Cement Committee. He noted that despite initial slow demand, renewed spending on construction has led to a shift, with most companies now able to meet market needs. The cement sector saw its first merger between Qassim Cement and Hail Cement, according to Argaam news, with another planned between City Cement and Umm Al-Qura Cement. NCC chair Badr Johar said that demand for cement is expected to strengthen substantially from late September 2024 to February 2025.

Saudi Arabia: Qassim Cement Company (QCC) has successfully completed the acquisition of Hail Cement Company (HCC) for US$378m. The transaction, initially announced on 25 September 2022, involved increasing QCC's capital to facilitate the acquisition of all HCC shares. The acquisition follows a binding implementation agreement reported by HCC on the Saudi Exchange.

Saudi Arabia: Qassim Cement Company has informed investors of its intention to acquire Hail Cement Company outright via a submission on the Saudi Exchange. As part of its offer, Qassim Cement Company plans to increase its own share capital by 23%, in order to issue some of it to Hail Cement Company’s shareholders.

Eastern Province Cement said this week that it had awarded a new production line project to Sinoma CDI. The subsidiary of China-based CNBM Group and Sinoma International Engineering has picked up the contract to build a 10,000t/day plant from design to installation at the cement producer’s Al Khursaniyah plant. Word on project finance is to follow later and the contract should be signed by the end of March 2024. The cement company last mentioned the project to the Saudi Exchange back in March 2023, when it suggested that it was focusing on upgrading existing lines at its Al Khursaniyah plant rather than building a brand new clinker plant at Najibiyah. The plans for the latter project date back to 2015. Eastern Province Cement holds limestone extraction licences in both locations.

It is worth noting that the last couple of new conventional production line projects announced in Saudi Arabia have been picked up by Sinoma International Engineering and related companies. Sinoma International Engineering won an engineering, procurement and construction (EPC) contract to build Southern Province Cement's upcoming Jizan cement plant in May 2023. This followed the awarding of a new 10,000t/day line by Yamama Cement, also to Sinoma International Engineering, in November 2022. However, Germany-based IBAU Hamburg was confirmed by Hoffmann Green Cement Technologies (HGCT) in September 2023 as being the company that would build a ‘clinker-free’ cement plant in Saudi Arabia in 2024. This will be a copy of HGCT’s H2 plant in France, which uses a combination of activated clay, ground granulated blast furnace slag (GGBFS) and gypsum to manufacture its products. HGCT has signed a deal with Shurfah Group to build several Hoffman plants under a 22-year exclusive licensing agreement.

Arguably though, despite all these new plant news stories, the bigger issue so far this year was Saudi Aramco's decision to raise its feedstock and fuel prices from the start of 2024. Several Saudi cement producers released warnings in response that production costs would rise and earnings would fall. Al Jouf Cement, Arabian Cement, Qassim Cement, Saudi Cement, Yamama Cement and Yanbu Cement each made statements to shareholders on the issue, saying that they were working out the impact, would announce what this might be when known and that it was likely to make a difference from the first quarter results onwards.

The timing of Aramco's price hike is poor given that after a tough year, with falling sales for some producers, demand was expected to pick up somewhat. Aljazira Capital, for example, in a cement sector report released in late December 2023, forecast a 3% year-on-year increase in cement sales volumes in 2024 following an estimated fall of 8% in 2023. Its reasoning was that the domestic housing construction market had declined in 2023, leading to high levels of competition in the central region of the country caused by high levels of company inventory. Looking ahead, the competition was expected to ease as more projects were generated outside the central region and demand from the country’s various large-scale infrastructure plans took off. We will have to wait for Aljazira Capital’s next report to find out how they think the market will cope with higher fuel costs, but it seems likely that business may remain tougher than expected for the cement producers in the short term at least.

Finally, one more story to consider is that Al Jouf Cement signed a deal with Rabou’ Al-Taybeh Company this week to export cement and clinker to Jordan. The initial period covers six months with the option for renewal. Up until 2022, at least, clinker exports from Saudi Arabia were growing most years since the export rules were relaxed in 2017. With a difficult market reported domestically in 2023, the appetite to focus on exports may be growing and this could be a sign of that. Another example this week of Saudi-based cement companies looking outside the domestic market could be detected when Northern Region Cement said it had sold a 49% stake in its Iraq business to Al-Diyar Al-Iraqia for Investments Company. The cement company said that the new strategic partnership would help it to further expand its investments in the promising market. It will use the proceeds of the deal to repay loans and for ‘external investments.’ It valued the transaction at just under US$44m. For more on what Northern Region Cement and others have been up to in Iraq, see Global Cement Weekly’s analysis from November 2023.

The steady stream of new clinker production lines suggests confidence in the cement sector in Saudi Arabia in the medium to long term. It is also fascinating to witness a secondary cementitious material plant like the one HGCT is planning on the way too. Unfortunately though, the recent fuel price rise looks like it might ruin the party in the short term for those hoping for better things in 2024.

The 26th Arab International Cement & Building Materials Conference and Exhibition takes place in Cairo on 15 - 17 January 2024. Visit Global Cement at stand N3

Saudi Arabia: The General Authority for Competition (GAC) has fined 14 local cement producers around US$37m for price fixing. The companies were found to have broken local competition law following an investigation by GAC. They are now each liable for a US$2.7m penalty. The producers concerned are: Al-Safwa Cement; Al-Madina Cement; Umm Al-Qura Cement; Al-Jawf Cement Company; Qassim Cement; Najran Cement; Southern Province Cement; United Industrial Cement; Yamama Cement; Riyadh Cement (Saudi White Cement); Arabian Cement; Saudi Cement; Yanbu Cement; and Hail Cement.

Saudi Arabia: Qassim Cement has concluded a non-binding memorandum of understanding (MoU) with Hail Cement for acquisition of the latter’s issued shares. After any acquisition takes place, Qassim Cement plans to issue US$377m-worth of share capital in favour of Hail Cement’s existing shareholders.

Saudi Arabia: Qassim Cement's sales fell by 30% year-on-year to US$78.4m in the first half of 2022 from US$112m in the first half of 2021. High costs compounded the decline to result in a net profit drop of 73% to US$14.4m from US$53.5m. The fall in profit was less sharp in the second quarter of 2022 than in the first: it fell by 75% year-on-year to US$6.68m in the first quarter of the year and by 71% year-on-year to US$7.71m in the second quarter of the year.

Saudi Arabia: Qassim Cement has entered into a preliminary agreement with China-based Chengdu Design & Research Institute of Building Materials Industry (CDI) for the engineering, supply and construction of a cement mill at its integrated Buraydah plant. The new mill will have a production capacity of 300t/hr. The project is budgeted at around US$40m and it has an implementation period of 15 months. More binding detailed contracts are expected to be signed by mid-January 2022.

The cement company also plans to appoint a consultant to define the scope of work and identify contractors to build a 30MW solar unit near the Buraydah plant. It said that the company would not incur any capital or operational expenditure as the payment would be based on actual consumption. The solar unit project is part of the country’s Saudi Vision 2030 strategic framework to reduce dependence on oil.

Saudi Arabia: Qassim Cement plans to build a new 10,000t/day production line at its Buraydah cement plant to replace some of the site’s existing lines. Construction will begin in the first half of 2022. The company will announce the cost of the project after completing preliminary studies.