By Tom Arnold
Increased capacity and ban on exports to bring decrease of up to 5% - report.
Cement prices in Saudi Arabia are expected to begin falling from 2010 because of increased capacity and a ban on exports.
A report from Jadwa Investment Co said cement prices in the Gulf kingdom would remain stable until the end of 2009 before dropping by three to five percent between 2010 and 2013 from about 250 riyals per ton, Bloomberg newswire reported on Wednesday.
Six new licenses for cement production in Saudi have been issued in recent years, with plans to issue a further seven, increasing competition for the eight publicly-traded cement companies in the kingdom.
Annual Saudi cement production will increase to 69.9 mn tons by 2013 from 38 mn tons at the end of 2007, Riyadh-based Jadwa said in the report.
“The huge increase in capacity under way combined with a recent ban on exports is expected to exert considerable downward pressure on cement prices in the years ahead,'' said Gasim Abdulkarim, Jadwa's equity research director.
The ministry of commerce and industry, in consultation with the listed cement companies, has kept a maximum price limit of 250 riyals per ton in place for cement producers for most of the past three years. Cement distributors are not bound by price controls.
A ban on cement exports, implemented in June to drive down domestic prices, may be lifted by the end of the year, Jadwa said.