Demand for cement in Saudi Arabia jumped to monthly record high in March 2009, according to the NCB Capital report released on Saturday. There are 12 cement companies in the Kingdom with an estimated annual production capacity of approximately 48 metric tons. Total dispatches (including exports) stood at 3.46mt versus 2.89mt in January 2009 and 2.94mt in February 2009. Total dispatches in the comparable month of the previous year were 3.49mt. The demand was particularly strong in Makkah and Madina, it said. The 3.38mt of cement/clinker sales achieved in the Kingdom last month “is the highest ever monthly sales reported in the country,” the report said. The sales last month were up 13.6 percent YoY and 17.6 percent MoM. In March 2009, the Kingdom produced a sizeable amount of cement and clinker. Despite this, the 3.30mt of cement production fell short of total cement demand, it said. As a result, manufacturers offloaded some of the old stock and helped reduce the cement inventory. Clinker stock as a percentage of cement sales stood at 249 percent in Mar 2009 versus 283 percent in the preceding month. Among listed firms, Saudi Cement Co located in the eastern region had the highest clinker and cement stock as a percentage of cement deliveries at 451 percent and 46 percent, respectively. Calculations indicate that price realizations for companies based in the western region continue to remain 6 to 8 percent above the industry average. Both Yanbu Cement and Arabian Cement located in the western region record the lowest clinker stock as a percentage of sales ratios of 91 percent and 35 percent, respectively. Export sales from the country continue to remain below the 100,000 ton mark. At 77,000 tons, cement exports from Saudi Arabia were down 85 percent YoY, but up 20.3 percent MoM. Domestic sales in March 2009 increased 17.6 percent MoM and 13.6 percent YoY. Total domestic sales of companies (including listed and private) stood at 3.38mt versus 2.87mt in Feb-09 and 2.97mt in March 2008. On an individual basis too, some of the companies - Southern Cement, Saudi Cement, Qassim Cement, Eastern Cement and Arabia Cement - achieved their highest-ever domestic sales numbers recorded in Mar 2009. Of listed companies, only Yanbu Cement registered a major decline in YoY sales. Both Yanbu Cement and its geographically closest competitor Arabian Cement have very low inventory levels. Cement sales outside the Kingdom stood at 77,000 tons in March 2009, as against 507,000 tons in March 2008 and 64,000 tons in February 2009. The 85 percent YoY decline is explained by the government restriction on sale of cement abroad. The special weekly cement export quota of 25,000 tons for Bahrain, if fully utilized, should result in sales of 100,000 tons per month, the report said. The two cement exporting companies - Saudi Cement Co and Eastern Province Cement Co - sold 64,000 tons and 13,000 tons of cement, respectively, outside the Kingdom in March 2009 versus 54,000 tons and 10,000 tons of cement, respectively in February 2009. Production covered 96 percent of the total cement demand for the month, while the rest was met through old stock. It resulted in a 13 percent reduction in the cement stockpiles at the manufacturer level. In contrast, clinker production increased during the month by 23.8 percent YoY and 16 percent MoM. Companies leading the increased clinker production are Saudi Cement, Arabian Cement, Tabuk Cement and Najran Cement. However, stockpiling of clinker at the manufacturer level is continuing at a slower pace. At the end of March 2009, total clinker stock held by cement producers was higher by just 1.5 percent MoM, the lowest rise since the export ban was put in place 10 months ago. Total clinker stock of the industry stood at 8.5mt in March 2009, or just short of three months' cement sales. Arabian Cement has the lowest clinker stock of 35 percent as a percentage of sales. For Saudi Cement, clinker stock stood at 451 percent, or more than four months' cement sales. Cement companies based in the western region hold low clinker stock, whereas those based in the eastern region seem burdened with huge stockpiles of clinker, NCBC report said. In QI 2009, price realizations for Yanbu Cement stood at SR254/ton versus the industry average of SR239/ton. In 2009, five firms lost domestic market share in favor of the other six. Eastern Cement was the biggest gainer of the month. Other companies that managed to improve their market share by a wide margin include Riyadh Cement and Qassim Cement. Winners: Eastern Cement (1.0 percent), Riyadh Cement (0.8 percent), Qassim Cement (0.7 percent), Arabian Cement (0.4 percent), Yamama Cement (0.4 percent), and Najran Cement (0.1 percent) Losers: Saudi Cement (-1.5 percent), City Cement (-0.7 percent), Northern Cement (-0.4 percent), Yanbu Cement (-0.4 percent), and Tabuk Cement (-0.2 percent) No change: Southern Cement New companies - Riyadh Cement, Najran Cement, City Cement and Northern Cement - have managed to increase market share at the expense of the traditional players. The new players were responsible for 14.3 percent of total cement sales in the first three months of 2009. As of April 22, 2009, the cement sector index is up 16.1 percent YTD vis-a-vis an increase of 8.6 percent in the Saudi benchmark index TASI. The upswing in 2009 comes after a fall of 50 percent in 2008. __
