Kingdom of Saudi Arabia Cement Market: Overview
Cement is one of the elementary material components in the construction industry. Its massive scope of applications can only be equaled by the sheer number of regions that consider cement to be a primary construction material over others such as steel and wood. This is because cement structure provide a high level of insulation, stability against external harsh environments and certain types of natural disasters. More importantly, cement can be cheaper than other construction materials. At the same time, construction materials such as wood cannot sustain like cement can in tropical regions, where the air is too humid and hot to allow the use of wood.
The Kingdom of Saudi Arabia cement market was calculated to have reached US$3.98 bn by the end of 2016. The market is expanding at a positive CAGR of 5.5% within a forecast period from 2013 to 2020 in terms of value, and is slated to touch US$5.07 bn by the end of 2020. The market is largely propelled by the booming construction industry in the region, supplemented by the increasing rate of investments in residential construction projects.
Central and Western Demand for Cement on the Rise
Based on the regional segmentation of the Kingdom of Saudi Arabia cement market into Central, Eastern, Western, Northern, and Southern, the regions of West and Central Saudi Arabia have so far held the dominant demand for cement. This factor is attributed to the greater rate of infrastructure development in these regions, coupled with a greater demand for residential construction projects. The eastern and southern regions follow in terms of demand volume in the Kingdom of Saudi Arabia cement market. Central Saudi Arabia currently holds a very low demand for cement.
Development Projects Boost Cement Consumption
In 2013, infrastructure development took up over half the overall cement volume manufactured in the Kingdom of Saudi Arabia cement market. This segment is highly likely to resume its champion status amid the application segments in the market over the coming years, thanks to the high level of investments proposed by the Saudi Arabia government. At the time, residential construction’s cement demand laid third in the list, but is expected to scale upwards over the coming years, due to a growing demand for residential construction projects. The Kingdom of Saudi Arabia cement market also shows a very high level of integration both forwards and backwards, thereby making it easy for leading players to maintain a high level of market activity. The demand for cement in infrastructure and residential areas is also likely to increase even further over the coming years, after the initiation of six economic cities across the Kingdom of Saudi Arabia, fueled by a growing population.
The overall growth of the Kingdom of Saudi Arabia cement market is, however, likely to be stifled by changes in government regulations regarding the supply of subsidized fuel, which has so far made it cheaper for companies to transport cement over longer distances.
Leading manufacturers currently situated in the Kingdom of Saudi Arabia cement market, include Yamama Cement Company, Najran Cement Company, Riyadh Cement Company, and Yanbu Cement Company. Players in this market are showing a greater drive for capacity improvement, due to the increasing number of construction projects and the prospect of maintaining long term customer relations and contractors.