Cement sector set to recover in H2: Aljazira Capital

The Saudi cement sector is set to see signs of recovery as of H2 2018 with an expected increase in government spending, Aljazira Capital said.

The combined sales of Saudi cement companies fell 16 percent year-on-year (YoY) in January 2018 to 4.08 million tons versus 4.85 MT in the same month last year.

For 2017, cement dispatches declined 15.1 percent to 47.23 MT, from 55.65 MT a year earlier.

The total utilization rate of the Saudi cement sector declined to 65.5 percent in January 2018, compared to 77.6 percent in January 2017, the report said.

Meanwhile, clinker inventory fell 1.27 percent on a monthly basis for the first time since April 2017, due to higher sales/production ratio. Inventories stood at 35.17 MT compared to 35.63 MT in December 2017.

“We expect inventories to continue declining during 2018; supported by temporary shutdowns in some production lines,” Aljazira Capital said.

Over the past two years, Saudi cement producers have seen inventories pile up due to sluggish local demand and costly fees on exports. The government scrapped export duties on cement this month, starting Feb. 1, Argaam earlier reported.

However, Aljazira Capital said it expects “limited potential” for cement exports, going forward.