Saudi Arabia to spend SR112.50 billion on cement over the next two years
A Fresh Take:
Way ahead in the GCC, it's Saudi Arabia that's expected to dominate the cement market, twirling toward a whopping $30 billion (SR112.50 billion) in the coming two years. The UAE trails closely behind with a $4 billion investment in the construction sector. Experts predict the overall GCC cement demand to surpass $49 billion within the same timeframe, with Saudi Arabia snagging 61.22% of the total Gulf share.
Abdullah Said Rudwan, head of the contractors committee at Jeddah Chamber of Commerce and Industry (JCCI), attributes this leading position to mega government projects, like the expansion in the two holy mosques, airports, metro, and highway projects. These monumental endeavors rely heavily on cement as the backbone of their construction.
The construction and contracting sector is on a rollercoaster ride, skyrocketing in the next two years before gradually settling down to normal levels, says Rudwan, after the implementing of projects.
Commercial directors for Middle East and India region at Grace Construction Products acknowledges the region's knack for mega projects, which have sparked rapid development within the sector. The private sector also plays a vital role, with shopping malls, towers, and housing units being still in high demand, he added.
In the past few years, cement consumption in the Saudi market has enjoyed a substantial increase. It swelled from 16 million tons in 2000 to an impressive 48 million tons in 2011, growing at a compound annual growth rate (CAGR) of 12 percent. For the period 2006-2011, the increase was a staggering 15.7 percent.
With construction projects booming as they are, cement demand is expected to witness a surge to accommodate the needs of the sector. Experts confirm this trend, attributing it to the enormous government backing of mega projects in the Kingdom. Last week, NCB Capital analysts approximated that cement sales would spike 8.2 percent YoY in 2013, hitting 56 million tons, growing at a steady average rate until 2015.
To sum up, a profound analysis of economic growth and ongoing infrastructure projects indicates Saudi Arabia's cement demand to potentially explode over the next five years, powered largely by colossal infrastructure projects in line with its Vision 2030 goals. However, accurate quantitative estimates hinge on intricate market research and in-depth project analysis.
Factors such as government policies, regional competition, supply chain and logistics, and sustainability initiatives will significantly impact market trends during this period. While Saudi Arabia may dominate the scene, the pace of growth in the UAE might be slightly more subdued due to the region's more established construction market. Despite Expo-related projects wrapping up, the UAE's infrastructure developments and economic diversification strategies will continue to provide a solid foundation for the cement market.
- In the realm of the Gulf Cooperation Council (GCC), news of Saudi Arabia dominating the cement industry with a projected $30 billion investment over the next two years has been circulating.
- The art of construction is thriving in the eastern region of Middle Arabia, particularly in Saudi Arabia and the United Arab Emirates, where the industry and finance sectors are intricately involved.
- The staggering increase in cement consumption in Saudi Arabia over the past few years, reaching an impressive 48 million tons in 2011, is a testament to the nation's commitment to mega infrastructure projects.
- The demand for cement in the Middle East, specifically in Saudi Arabia and the UAE, is expected to surge due to ongoing infrastructure projects, with the region's private sector also contributing significantly to the demand through construction of shopping malls, towers, and housing units.