Saudi Arabia could finally lift the ban on export of cement and the announcement could come in the next few days, a senior industry expert has said.
The decision to lift the export ban on cement has been pending with the Saudi Government, which is demanding an assurance from manufacturers that the prices will not be increased.
A senior industry expert, speaking to Emirates Business during the Steel and Cement Arabia Conference being held at Expo Centre Sharjah, said the government has to remove the ban to reduce stockpiles.
"According to information available, Saudi Arabia could very soon announce its decision to lift the ban. There is no other option left. The country's current annual production capacity is 17 million to 20 million tonnes more than the domestic consumption," said the official on condition of anonymity.
However, he said, it is not clear if the removal of the ban would be applicable to all companies or only to those that agree to recommendations set by the Saudi Trade and Industry Ministry.
Saudi Arabia had last week said it would continue with the ban on export of cement until producers agree to the demands and conditions set by the Ministry of Commerce, but added that export permission could be granted only to those companies accepting its conditions. Meanwhile, according to media reports, the ministry has decided to lift its restrictions on cement exports from May 25.
According to Fahad Ali Al Zamil, President of Arabian Bulk Trade, a Saudi-based trading company, Saudi is looking towards exporting to Qatar and the UAE, once the ban is lifted. "We used to have good demand in the Gulf, especially from Qatar and the UAE. Today, it is being satisfied by imports from Pakistan and India. Because of the ban, these countries are benefiting."
Saudi Arabia could export cement at Dh15 per bag [that weighs 50kg], he said. "At present we are selling in Saudi Arabia at Dh13 per bag. This is ex-factory price. The government, however, wants to bring down the prices to Dh11 per bag," he said. "I know in the UAE too the ministry has introduced a price cap of Dh14 per bag. But it is unrealistic for companies here to sell at such low rates."
According to the official, companies would rather opt for a cut in production than produce cement at a loss and stockpile. "If the government does not lift the ban, factories would prefer to go for production cuts. Given the present economic situation, we can expect a production cut of up to 30 per cent," said Zamil.
Khaled Galal Hegazy, Vice-President of Hegazy Building Materials and a consultant, said Saudi Arabia could lift the ban on cement exports in days. "It is high time the government lifts the ban. The stockpiles have been rising and it is not good for the companies," he said. "The loss of producing cement and stockpiling them is much greater than cutting production. Usually factories go into annual maintenance and this is the one of the ways of cutting production."
According to a recent report by NCB Capital, the 12 cement companies in Saudi Arabia have an estimated annual production capacity of 48 metric tonnes.
