Demand seen to improve gradually in Q4: Arabian Cement CEO

Demand for cement is expected to continue to improve gradually during the fourth quarter of this year, hence enabling the sector to achieve balanced growth of around 3%. This uptrend will likely continue until February 2025, Arabian Cement Co.’s CEO Badr Jawhar told Argaam.

The top executive indicated that he had previously anticipated an improvement in demand in H2 2024. This is on the back of the solid demand witnessed since the beginning of the year, with the current market sales rising by 4.9%.

On Arabian Cement’s financial performance, Jawhar explained that the Q3 2024 net profit growth was driven by the increase in average selling prices, despite the uptick in the purchase costs of energy products such as fuel and diesel. The average selling price has been disclosed in the audited income statements published on the Tadawul website.

The cement producer’s clinker inventory, according to the CEO, amounted to about 3.5 million tons, in addition to an inventory equivalent to a week's sales of cement. He also stressed the company's keenness to maintain stockpiles of all cement products to ensure meeting customer needs while offering reliable supply chains for strategic projects in Makkah and Madinah.

Arabian Cement has undertaken no clinker or cement exports year to date, due to weak global demand and the surplus inventory priced at low levels by East Asian countries. In addition, Egypt and Algeria dominated 85% of African markets as a result of export subsidy programs, which led to a decline in prices on the Red Sea coast to an unattractive level of $28 per ton, Jawhar noted.

The company can double the volume of daily deliveries in case of a sudden demand boost. This shall therefore help streamline construction works, while also catering to the ready-mix concrete factories’ supply needs and demand from customers, individuals, and medium and small projects for the various cement products.

Arabian Cement, as per the top executive, is distinguished by its strategic location and proximity to direct markets, which can be reached in less than four hours on the same day of order receipt, according to Jawhar.

He stressed that the company is monitoring global markets and the size of demand and supply in the Red Sea, in its quest for potential best-yield opportunities.

The CEO expected demand to remain at favorable levels in Q4 2024. He noted that sales of Arabian Cement, in specific, is poised to remain on par with the same quarter a year earlier, with a relative improvement in selling prices compared to Q3 2024.

According to data available to Argaam, Arabian Cement posted SAR 128.8 million in net profit for the first nine months of 2024, a 20% rise from SAR 106.9 million in the year before. The third-quarter bottom line amounted to SAR 45.8 million.