Displaying items by tag: Saudi Arabia

Saudi Arabia: More than 70 people are to be investigated in connection with the current cement crisis in Jeddah, which has seen cement become expensive and scarce since the start of 2012. Trucks owned by the accused were captured while selling cement at inflated black market prices in various parts of the city.

A special committee, formed by Jeddah Govenor Prince Mishaal bin Majed, raided about 15 warehouses where cement was being sold by foreign dealers. It is claimed that the dealers had signed agreements with contractors that were executing a number of government projects to sell them cement at high prices. "This has created an acute shortage in the quantities of cement available in the market," he added.

Prior to the commencement of the investigation, local press had reported angry crowds at points of sale and said that security forces had to intervene in some instances. Market sources believe the crisis was created by the inability of the factories to work at full capacity because they were not given enough fuel.

Abdullah Al-Ammar, a contractor, did not see any justification for the shortage. "This is an artificial crisis created by some traders who want to monopolise the cement market and stack it away in their stores, only selling it when the price goes up," he said. Al-Ammar asked the Commerce Ministry to impose harsher punitive measures against traders who were caught selling cement on the black market or hiding it. He hoped that the problem would be alleviated when two new cement factories are commissioned later in 2012.

Saudi Arabia: Cement producers in Saudi Arabia have announced improved profits for 2011 and the fourth quarter of 2011. Companies have cited increased demand for cement and higher selling prices as reasons for their improved profits.

Yanbu Cement Company posted a net profit of US$40.9m for the fourth quarter of 2011 compared to US$26.6m for the same quarter of 2010, an increase of 54%. The company posted a profit of US$33.3m for the previous quarter. The company's net profit for the whole of 2011 was US$141.2m compared to US$114.8m in 2010, an increase of 23%. The 12 month gross profit was US$148.1m, up by nearly 20% compared to 2010. Yanbu's operational profit over the same period was US$139.8m, a year-on-year increase of 19.5%.

Meanwhile, Saudi Cement Company has announced that its net profit jumped by nearly 40% in the fourth quarter of 2011, rising to US$56.6m. The company said that the increase from a net profit of US$40.5m in the same period of 2010 was due to higher production and demand. It should also be noted that the company has added new production lines in the past year, which boosted the company's output and profit.

Eastern Province Cement Company (EPCC) also reported strong results, with a net profit for 2011 of US$97m, compared to US$91.5m for the same period of 2010. This is an increase of 6%. In the fourth quarter of 2011 the company's net profit was up to US$28.7m compared to US$22.1m for the same quarter of 2010, an increase of 28%. The net profit was up by 41% compared to the quarter ending 30 September 2011.

Saudi Arabia: Al Jouf Cement has announced that it has awarded a U$236m contract to China's Chengdu Design & Research Institute of Building Materials Industry Ltd, for the construction of a second production line at its plant. It was reported that the new line will have a capacity of 5000t/day.

Al Jouf said that the project would be financed by a combination of its own funds and debt and would be completed by February 2014. When complete, the new line will double the company's cement capacity to 3.5Mt/yr.

Saudi Arabia: On 2 January 2012 Saudi cement producer and trader Al Jouf Cement announced that it is set to invest US$236m on the construction and commissioning of a second production line in addition to a dedicated power plant. The new production line will have a capacity of 5000t/day. The project, to be financed with a combination of own funds and debt, will take 25 months to complete.

Meanwhile, Hail Cement Company has obtained a large single order for its cement, having signed a US$31.2m joint-venture housing contract with Teberak Trading and Contracting Company and Mo B. Co. for Civil Construction. The 80,000m², four-phase project will be built around 220km north of the northern city of Hail and will be completed within 18 months.

Saudi Arabia: Saudi Arabian cement producer Arabian Cement Company (ACC) has seen its net profit for the first nine months of 2011 surge by 36% year-on-year to US$88.7m.The company attributed the increase in bottom-line figures to rising production and sales volumes but did not give exact figures.

ACC's operating profit jumped by 48.2% to US$96.9m in the first nine months of 2011. For the third quarter of 2011, the company registered a net profit of US$27.9m, an increase of 28.4% year-on-year.

Saudi Arabia: United Cement Company has won the first of three new licenses to set up new cement plants in Saudi Arabia. United Cement's director general, Fahd bin Abdullah Al-Harbi, signed the deal on behalf of his company.The total annual production capacity of the completed plant is not expected to be more than 2Mt/yr.

Sultan bin Jamal Shawly, undersecretary at the ministry for mineral resources, said, "This license is issued as part of the first phase during which two more licenses will be issued to exploit limestone used for Portland and white cement." Shawly added that the license relatedo Hurrat Hadhen in Taif. "We will announce the winners of the second and third licenses on 26 November 2011 at the beginning of the new Hijrah year 1433H," he added. A number of local producers are in the running to secure the two other new licences.

Shawly said that the licenses are being issued with certain conditions that should be strictly followed by the winning company. "One condition is that the (plant operators) should employ and train Saudi workers and the percentage of Saudi workers should be not less than 40% by the end of the first year after starting production," he said. "We have also insisted that the number of Saudi workers in the company should reach 80% after the completion of four years of production."

Saudi Arabia: Saudi Aramco has said that it continues to supply all of the fuel contracted by Saudi Yanbu Cement Co, to accusations from the cement producer about a lack of fuel.

As reported in Global Cement Weekly #16 Yanbu Cement was forced to delay the launch of a production line that was scheduled to open by the end of September 2011. Yanbu Cement has now announced in a stock market statement that Aramco had not responded to its requests for additional fuel.

"Saudi Aramco confirms it is currently supplying Yanbu Cement with all the allocated volumes of fuel oil as per the signed agreement," Aramco said in a statement. "Yanbu Cement Co should have secured the needed fuel ahead of a commitment to expand and build the fifth production line. The fact that no agreement was concluded in advance absolves Aramco from responsibility that may result from any fuel shortage," Aramco added.

However other cement companies have also reported that shortages of subsidised fuel is threatening growth. Safar Dhufayer, the chief executive of Southern Province Cement Co (SPCC), raised the issue at the Reuters Middle East Investment Summit in Riyadh. He said that his firm, the Gulf country's biggest cement producer by market value, may delay the launch of a new line that is expected to raise its production capacity due to the fuel shortage.

"Our new line under construction should be commissioned by the end of 2011, but if there is not enough fuel we will not run it and that will create more pressure from rising demand which we cannot meet," Dhufayer said. "We only receive 80% of the fuel we need."

Demand for cement in the largest Arab economy is seen at 48Mt in 2011, increasing to up to 52Mt by 2013, while supply is 55Mt/yr in 2011 and plans for growth are uncertain, Dhufayer said. Cement companies in Saudi Arabia have a competitive advantage over global rivals as they benefit from subsidised fuel, supplied by government-owned Saudi Aramco.

Cement firms in Saudi Arabia, which is spending over USD400bn on infrastructure projects and is planning to build 500,000 new homes, faced a cement shortage in the market in 2008 that led to a ban on exports. The ban is still in effect.

Saudi Arabia: Saudi Cement Co has reported a 39% rise in its third quarter net profit. The rise was attributed to increased efficiency and higher local demand. The firm made a net profit of USD52m in the three months ending 30 September 2011, compared with USD37m in the same period in 2010. The company said it had raised efficiency by using new production lines and that local demand had grown. It attributed the fall in profits from the second quarter to a seasonal decline in sales. The company posted a second quarter net profit of USD57m.

Saudi Arabia: Southern Province Cement Co., which is Saudi Arabia's biggest cement firm by market value, has announced that its second-quarter net operating profit rose by 29.2% compared with the year-earlier period, to USD63.7m. It attributed the increase to higher demand driving sales.

The result was marginally above the USD63.2m predicted earlier by the firm. First-half earnings per share were USD0.88, compared with USD0.71 in 2010.

Saudi Arabia: Cement companies in Saudi Arabia recorded a 16% increase in sales in April 2011, the highest in more than a year. Domestic cement sales grew to 4.2Mt in April 2011, compared with 3.6Mt in the same period of 2010. Private projects, notably those for housing and schools boosted demand for the material.

"In 2010 people were very wary. The last thing they wanted to do was commit money, but now the outlook is looking brighter," said Farouk Miah, an analyst at NCB Capital in Riyadh. "There is also a lot of activity for plans to develop the rest of the country, in Makkah, Madina and Jeddah," he added.

Saudi Arabia is expected to need two million more homes by 2014 to keep up with the demands of a population that has quadrupled in 40 years. Shares of cement companies have already had a decent run in 2011, up an average of 24% over the same period of 2010.

It is expected that Saudi Cement, Southern Province Cement and Yamama Cement should benefit from the demand because they have the largest volume. Smaller cement companies, which are already running at full capacity, will be less well positioned to benefit.