Covid-19 curbs imposed by the Saudi government may impact cement demand.
Project delays may hit Saudi cement demand
01 May 2020
Saudi Arabia’s cement sector has not witnessed any impact from the coronavirus pandemic in terms of year-on-year (y-o-y) volume growth during the first quarter of 2020, according to a report by Al Rajhi Capital.
The total market volume in Q1 grew 33 per cent on an average when compared to last year. The report stated the companies under its coverage combined together witnessed similar y-o-y average growth.
From the companies under coverage, Qassim Cement reported the highest y-o-y growth of 53 per cent followed by Yanbu Cement and Yamama Cement with y-o-y growth of 43 per cent and 38 per cent, respectively, it added.
However, restrictions imposed by the government to reduce the spread of the virus have resulted in project delays, which may directly impact the cement demand in the kingdom and may cause under-utilisation of capacities.This along with the Ramadan season are expected to lower cement volumes and thereby the revenue of the producers mainly in the month of April and May.
Tabuk Cement has already made an announcement that it expects the epidemic to have an impact on its financial results, said the report by Al Rajhi Capital.
The pandemic has further hammered the oil price to its lowest, which may result in lower government spending in the country. This might disrupt the current and future projects including housing and infrastructure, it added.
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