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RIYADH: ������Ƶ’s cement sector registered a sharp upswing in the second quarter of the year, with total sales by the Kingdom’s 17 producers reaching 13.13 million tonnes. 

According to figures by Riyadh-based Al-Yamama Cement, this marks a 21 percent increase compared to the same period last year. 

The rise was driven almost entirely by local demand, which accounted for 97 percent of all dispatches and increased by 23 percent year on year. Export volumes decreased by 16 percent, accounting for only 3 percent of total cement sales during the quarter. 

“Key drivers based on our market analysis are, first, the megaprojects activation: progress in Neom, ROSHN, Diriyah, and The Line translated into large batch cement drawdowns, particularly in Tabuk, Riyadh, and Eastern regions,” said Amr Nader, cement expert and CEO of UAE-based advisory firm A³&Co. 

Nader told Arab News that another factor was seasonal acceleration. With both Ramadan and the Hajj season falling in the second quarter, periods when construction activity typically slows due to reduced working hours and labor availability, contractors advanced cement purchases. 

The pre-holiday push to meet project milestones and complete concrete pours before the slowdown triggered a temporary spike in local cement sales early in the quarter. 

An inventory depletion strategy is another reason. “Some companies pushed domestic sales aggressively to clear stock before summer fuel adjustments,” added Nader. 

������Ƶ has been accelerating its Vision 2030 agenda, channeling significant resources into megaprojects and infrastructure developments aimed at diversifying the economy. 

The spending drive has been evident in recent budget reports, where planned increases in government expenditures have contributed to calculated fiscal deficits. According to the International Monetary Fund, these deficits are part of a deliberate strategy to complete priority projects while maintaining fiscal stability. 

Public debt-to-gross domestic product remains within low-risk sovereign thresholds by global standards, supported by ample fiscal buffers and prudent debt management under the Vision 2030’s Fiscal Sustainability Program. 

Company-level performance 

At the company level, Al-Yamama Cement led the market in the second quarter with 1.93 million tonnes sold locally, capturing a 15.2 percent market share. It was followed by Saudi Cement with 1.36 million tonnes, Qassim Cement with 1.14 million tonnes, and Yanbu Cement with 1 million tonnes. 

While local sales soared, exports were comparatively weak. Saudi Cement remained the top exporter with 376,000 tonnes sold abroad, followed by Najran Cement at 50,000 tonnes, and Eastern Province Cement at 5,000 tonnes. 

Nader said increased competition in target markets was a major factor behind the decline in cement exports. “East Africa and Yemen have seen rising local production, such as capacity expansions in Kenya and the reactivation of plants in Ethiopia, alongside aggressive pricing from Turkiye and Iran,” he said. 

Other factors included export quotas and licensing requirements, with several producers choosing to focus on clinker shipments due to their higher margins and simpler logistics, he added. 

Freight disruptions also played a role, as Red Sea security risks forced vessel rerouting, increasing lead times and shipping costs to East Africa and Yemen. This had a greater impact on bagged cement than on bulk clinker. 

Customs and standardization delays in markets such as Sudan, Ethiopia, and Somalia contributed to shipment hold-ups and, in some cases, outright cancelations. 

Clinker production and sales 

Clinker production, the precursor to cement, rose significantly during the quarter. Total clinker output reached 14.80 million tonnes according to figures by Al-Yamama Cement, reflecting a 12.6 percent year-on-year increase. 

Saudi Cement was the leading producer with approximately 2.15 million tonnes. As kiln utilization increased to meet rising demand, producers also built up strategic inventories. 

Clinker stockpiles climbed 2.85 percent from the previous year, totaling 134.05 million tonnes by the end of June. Southern Province Cement held the largest inventory, with 20.15 million tonnes in stock. 

Clinker exports outpaced cement shipments during the period. Saudi firms exported 1.63 million tonnes of clinker in the second quarter, marking a 39 percent annual increase. 

The surge in clinker exports from ������Ƶ in the second quarter was driven by a combination of market and operational factors. According to Nader, higher global free-on-board prices, particularly in Asia and East Africa, made exports more lucrative than domestic cement sales. 

Shipping advantages also played a role, as Red Sea constraints proved less problematic for bulk clinker vessels, especially via Yanbu and Jeddah ports. With an estimated 35–38 million tonnes of surplus clinker, producers maximized exports to manage inventories and avoid seasonal plant stoppages, while some benefited from foreign exchange gains through dollar‑denominated sales. 

Key destinations included Bangladesh and Kenya, along with opportunistic shipments to Benin and Ghana, and steady short‑haul supply to Yemen’s grinding units. 

Saudi cement prices among region’s lowest 

“������Ƶ continues to enjoy some of the most affordable cement prices in the region, largely because of fuel subsidies and domestic overcapacity,” Nader said. 

As of August, retail prices in most Saudi regions range between SR12.5 ($3.33) and SR14 per 50‑kg bag, which is approximately $67–75 per tonne, with the Eastern Region generally at the lower end due to its proximity to production plants and export hubs, Nader added. This stability has held despite stronger domestic sales and rising input costs. 

Regionally, prices are often higher due to different cost structures and supply dynamics. In the UAE, bags typically sell for SR14–SR16, reflecting higher energy and import costs. In Oman, the range is SR13–SR14.5, while in Egypt, prices are SR10–SR11 per bag, though high inflation and currency depreciation weigh on affordability, according to Nader. 

Jordan’s prices reach SR15–SR16, due to limited domestic production and higher operating costs. 

While ������Ƶ’s prices remain competitive, the sector continues to face margin pressures from rising fuel costs and periodic price competition among producers. 

Nader described the situation as mixed across the industry. Average revenues for Saudi cement producers rose 15 to 20 percent year on year in the second quarter, reflecting higher domestic sales volumes and, in some cases, stronger clinker exports. 

However, net profits were flat or down by up to 10 percent for many companies, as gross margins contracted from 26 to 30 percent in the second quarter last year to around 22 to 25 percent this year. 

The squeeze on margins was driven by rising input costs, particularly fuel, Nader said. Energy prices increased in line with ongoing regional fuel subsidy reforms, raising kiln operating costs. 

Several companies also increased their use of alternative fuels, but many of these systems are still in early adoption stages and have not yet delivered the full efficiency gains expected. Meanwhile, logistics bottlenecks, including port congestion and Red Sea freight disruptions, pushed up distribution costs. 

Performance varied significantly by player. Southern Cement and Eastern Province Cement were able to maintain margins, leveraging strong export channels to offset local price pressures. 

Companies like Qassim Cement and Tabuk Cement, which rely heavily on local bagged cement sales and have less flexibility in fuel sourcing, saw sharper profitability declines. 

While the second quarter brought clear revenue gains, persistent margin pressure meant that only the most operationally efficient producers, those with vertical integration, strong export channels, or advanced fuel optimization, were able to turn the sales surge into significant profit growth.