Riyadh – Mubasher: Aljazira Capital said that although 2017 budget spending improved, 2017 cement dispatches are expected to remain muted.
The research firm attributed the state of cement dispatches this year to the back of tight liquidity position and the government’s effort to prioritize its’ project pipeline to improve its efficiency.
Cement sales declined 9.5% year-on-year to 55.6 million tons in 2016 from 61.44 million tons, due to weak demand and lower awarded contracts, in addition to slowdown in construction, the report said.
Earlier, Saudi government announced cement export regulations, under which the companies will pay back the subsidy on fuel, and the cost will be between SAR 85-133/exported ton, Aljazira Capital mentioned.
“We believe this could increase the cost per exported ton to SAR 280-340 (including shipping cost and operating expenses), which limit potential export markets and profitability,” according to the report.
Aljazira Capital expected that the cement sector will show signs of recovery over 2018 and into 2019, along with improvement in crude oil prices.
