The cement market
in Kingdom of Saudi Arabia has grown tremendously in the last few years due to its booming economy and growing construction activities. Cement is the backbone of the construction industry in Kingdom of Saudi Arabia. Though cement has the lower price in a construction activity, it still holds a significant market share in the Kingdom of Saudi Arabia market. Thus, the slightest change n the selling price of cement causes a fluctuation in a project’s profit margin.
Cement Market to be Helped by Flourishing Construction Industry in Kingdom of Saudi Arabia
Construction materials, mainly cement, impact the country’s GDP in large proportions. The construction and building materials sector usually follows the growth of a country’s GDP as its demand remains a perpetual one in the tourism sector, in real estate, and for infrastructure projects. In recent years, the industrial expansions in the Kingdom of Saudi Arabia have also contributed to the growth of the cement industry in the region. Needless to say, the rich pool of resources in the Kingdom of Saudi Arabia such as limestone also contributes to large scale production of cement.
Saudi Arabia holds the largest construction market share in the Middle East, with several multi- billion dollar plans underway in residential, infrastructure, commercial, private, and public sectors. The upcoming projects of the construction industry influencing the demand for cement in the coming few years will be schools, infrastructural projects, commercial and residential properties, healthcare sector, and growth of manufacturing industry.
Infrastructure Sector Holds 50% Market Share of Cement Market
The cement market in the Kingdom of Saudi Arabia is segmented on the basis of applications in various sectors and on the basis of regions. The application segment is inclusive of residential, commercial, infrastructure, and others, which includes cement bricks. Depending on the region the market is divided into central, northern, southern, eastern, and western zones. Out of these segments, infrastructure held the largest market share in terms of both revenue and volume in 2013 at about 50%, while the residential sector holds the third position in the cement market of the Kingdom of Saudi Arabia. As manufacturers are looking at ways to expand their businesses they are increasing their capacity to cater for the growing demand for cement. Thus, as the infrastructure and construction sectors in this region grow, they will fuel cement market.
Western and Central Regions of Kingdom of Saudi Arabia Dominant in Cement Market
In 2013, demand from western and central regions of the Kingdom of Saudi Arabia was seen to be the highest. Together they made up the largest share of the total demand in the region. These regions were followed by southern and eastern regions.
How Key Players are Gaining a Competitive Edge
The key players in the cement industry in the Kingdom of Saudi Arabia are gaining a competitive edge with aggressive backward and forward integration. This is also helping them in pursuing many upstream and downstream activities. The integration is not only providing the players an advantageous ground, but also ensuring a good feedstock supply and powerful market presence.
Currently, industry participants are focusing on increasing their production capacities to meet the growing demand from various dependent industries. The rise in the production capabilities of several units can especially be seen in the western and central zones of Kingdom of Saudi Arabia. Some of the key players to be observed in the coming few years are Saudi Cement Company, Yamama Cement Company, Najran Cement Company, and Riyadh Cement Company. The financial outlooks of these markets, potential mergers and acquisitions, investment in research and development, and changes in governmental rules and regulations will decide the fate of the cement market in the Kingdom of Saudi Arabia.