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Tue 12 Apr 2016 03:11 PM

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Saudi Arabia lifts export ban on cement, steel

Cement companies welcome the move, await details of the new rules from the Ministry of Commerce

Saudi Arabia lifts export ban on cement, steel
(Image for illustrative purpose only)

Saudi Arabia has lifted a ban on exporting cement, a senior industry official was quoted as saying on Tuesday, while an industry source indicated a similar ban on steel has also been eased.

The relaxing of the bans comes as the kingdom's construction industry is suffering from the impact of lower oil prices, which has resulted in the government cutting back on spending on many projects.

Ahmed bin Abduh Zugail, who is chief executive of Yanbu Cement Co and the deputy head of the national committee of cement companies, told the Al Riyadh newspaper that cement companies welcomed the move but were awaiting details of the new rules from the Ministry of Commerce.

The Saudi government imposed a ban on cement exports in 2008 to push prices down and accommodate demand from large government-funded infrastructure projects, although some companies were allowed to export at prices lower than those in the local market.

Steel rebar exports have been similarly restricted. However, an industry source said the ban on such construction rods had been lifted around 10 days ago. He declined to comment further.

The Makkah newspaper reported that among the conditions which both cement and steel firms would have to meet to export goods would be paying the difference in energy costs between the local and international market.

It wasn't clear in the report to whom the payment would be made.

The Ministry of Commerce could not be reached for comment.

Shares in cement companies jumped on the news, with the cement index finishing the day 5.3 percent higher. Southern Province Cement Company and Saudi Cement , the two largest cement firms by market value, rose 5.8 percent and 5.7 percent respectively.

New activity in the Saudi construction sector has slowed in recent months as a slump in oil prices has pushed the government to cut spending on non-essential projects. Worker protests over unpaid wages, rare in a kingdom that tolerates no public dissent, have also become increasingly common.

A separate newspaper report in November said the government was considering lifting the ban to ease oversupply within the local market.

Mohammed Alomran, a member of the Saudi Economic Association, told Reuters: "It seems the surrounding countries have a slowdown too, while Yemen is still not stable (enough) to be rebuilt. But the cost of transportation by land is very expensive and may not be feasible."

"The companies which will likely benefit from the reported lift are those close to the sea as marine transportation is cheaper," he said.

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