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A cement price war is highly likely to occur in the Saudi Arabia region due to the growth of the giga-projects (an elaborate initiative intended to turn the historic, cultural area of Saudi Arabia into a world-class, luxury, modern tourist destination and global trade hotspot). Due to the improvement of the area, countries in neighboring regions have gained interest in Saudi Arabia and have begun to invest in their developments. This is causing great competition and it is believed that this newfound demand will lead to a great decline in prices of cement and other construction goods in the area.
“We believe that the competition in the central region might evolve into a price war, and companies could start cutting prices on a larger scale to retain the market share in the region,” noted a reporter documenting the latest in Saudi Arabia.
Statistics of The Cement Price Drops in Saudi Arabia
The average selling price for cement fell to $46.47 per ton from $49.59, this price drop occurred despite the rapid increase in housing and development structures in 2022. Local cement sales only accounted for approximately 89% of total clinker production (a highly common cement production, it’s a mixture of limestone and minerals transformed by heat) between January 2022 and May 2023, according to reports.
According to documentation domestic cement sales are projected to decline by 9% annually to 46.3 tons this year, and inventories will reach 36.9 tons. Documentation covering various businesses noted a decrease of 9.1 per cent in exports by the end of 2023 and year over year after.
Several companies were penalized and punished by Saudi Arabia’s antitrust authority as 14 cement companies were fined a collective of $37 million for colluding to raise cement prices in the area in April 2023 due to the changes in rates. The General Authority for Competition imposed a $2 million fine on each one of the cement producers for tampering with the cement costs for their benefit, infringing Article 4 of the Competition Law. The law forbids practices that involve agreements, contracts, and deals among competing companies that lead to an increase or decrease in rates of goods. Nevertheless, the rates of cement are expected to continue to decline in the region of Saudi Arabia and so far there are no signs them of slowing down. |
