Displaying items by tag: Saudi Arabia

Saudi Arabia: Najran Cement has received a clinker export licence from the Ministry of Commerce and Investment. The licence is valid for one year from 30 April 2018.

No consolidation has happened yet in the Saudi Arabian cement industry but exports have started to be announced. Yanbu Cement signed an export deal in March 2018 to despatch 1Mt of clinker and 0.5Mt of cement from one year from 1 April 2018. Prior to that, Al Jouf Cement Company started a contract to export 72.000t/yr to Jordan from late February 2018. Earlier still, Bahrain was expected to benefit from a lifting of cement export tariffs at the end of January 2018.

Its early days yet but some of sort of action is starting to happen about the country’s falling cement sales. If export deals are in the early stages of being set following the lifting of the ban, then local movements of cement have intensified. As Al Rajhi Capital reports in its latest market update, that producers have been forced by low sales and high inventory levels to take action. It says that cement companies have started to sell products in different parts of the country than they do normally leading to a ‘price war’. The financial services and analytical company has pinpointed the central region as the key battleground as company market shares have fallen over the last six months as northern producers have moved in.

Graph 1: Cement sales (Mt) by quarter in Saudi Arabia, 2015 to March 2018. Source: Yamama Cement.

Cement sales fell by 15% year-on-year to 11.8Mt in the first quarter of 2018 from 13.7Mt in the same period in 2017. This is the first time in recent years that sales did not rise from the fourth quarter to the following first quarter. Not a good sign. Despite the bad news, a few producers did mange to increases their deliveries in the first quarter, including Saudi Cement, Hail Cement, Umm Al Qura Cement and United Cement.

Bizarrely, into this sales environment, plans for the long delayed Al Baha Cement cement plant project have re-emerged. The project previously has received coverage at various stages over the years. This time it has reportedly gained a licence to set up the company and it hopes to start tendering for the build in the second half of 2018. The investors may want to leave it a little longer given the current state of the Saudi cement industry.

Saudi Arabia: Cement sales fell by 11% year-on-year to 11.8Mt in the first quarter of 2018 due to a continued slowdown in the construction industry. Weak demand and high inventory levels has forced cement producers to sell their cement in other parts of the country and export to other countries, according to a report by Al Rajhi Capital. The report cited Yanbu Cement's export agreement although it said that its low production costs gives the company the advantage to export at lower prices than its competitors.

Increased competition within Saudi Arabia has led to a price war. The report marked the central region as an attractive region for northern region cement companies due to the relatively bigger market. The sales market share for northern cement companies increased in the last six months. On the other hand, central region companies' market share decreased slightly during the same period.

Yanbu Cement signed a one-year agreement to export 1Mt of clinker and 0.5Mt of cement from April 2018. It is estimated that the deal with Yanbu Cement US$26.6m in extra sales revenue in 2018. Al Rajhi Capital reckoned that the cement producer would be likely to renew the export deal in 2019 as its low margins are unlikely to aid earnings.

Saudi Arabia: Yanbu Cement has signed an agreement to export 1Mt of clinker and 0.5Mt of clinker for one year from 1 April 2018. The arrangement is expected to add around US$27m to the company’s revenue.

India: The price of imported petcoke has hit a multi-year high in March 2018. Increased demand and a shortage due to maintenance work at refineries has caused the rise in price, according to the Mint newspaper. In November, the Indian Supreme Court temporarily banned the use of petcoke in Delhi, Haryana, Rajasthan and Uttar Pradesh. The import duty of the fuel was then raised to 10% from 2.5%.

Deepak Kannan, managing editor of Asia Thermal Coal at S&P Global Platts, said that local demand for petcoke is around 23 – 24Mt/yr but that local supply is only 14Mt/yr. Much of the country imported petcoke comes from the US or Saudi Arabia. Petcoke prices are expected to relax in April 2018 as refineries return to normal operation.

Saudi Arabia: Al Baha Cement plans to build a 6000t/day plant that will manufacture sulfate-resisting Portland cement (SRPC). The company is looking for bids for a financial consultancy contract for the new plant, according to Inside International Industrials. The project is expected to cost US$100m, which will be raised from banks. The Minister of Commerce and Industry has approved the license for establishing the company. Tendering for engineering, procurement and construction is expected to occur in the second of half of 2018.

Jordan/Saudi Arabia: Al Jouf Cement Company has activated a contract to export 72,000t/yr of cement to Jordan with effect from late February 2018. The company previously signed the deal with Saudi Industrial Export, according to Mubasher. The financial effect from the agreement is expected to show in the company’s results for the first quarter of 2018.

Saudi Arabia: Badr Jawhar has resigned as the chief executive officer of Najran Cement for personal reasons.

In a separate announcement, Najran Cement has appointed Turki Bin Ali Al Shanifi to its board of directors. Turki Bin Ali Al Shanifi holds a degree in Computer Science, specialising in Information Systems and has over 20 years of experience in working with private sector companies in leadership positions. His appointment follows the resignation of Abdulwahab Bin Saud Al Babtain as an independent member of the board.

Saudi Arabia: Najran Cement made a loss of US$5.8m in 2017 from a net profit of US$33.5m in 2016. It blamed the loss on lower prices, reduced sales volumes due to lower demand for cement and greater competition and higher production costs. Its sales revenue fell by 39% year-on-year to US$115m from US$189m.

Saudi Arabia: Najran Cement says that the financial impact of temporarily stopping its third production line and reopening its second production line will be around US$3m. The cement producer intends to sell stock from inventory to mitigate the cost.