Cement Industry in Saudi Arabia
+ Abdullah Labib Ibrahim Elgamal
+ Aziz Yousef Aziz Yassin
+ Mohamed Adel Abd Elhameed Selim
+ Talaat Mohamed Amer Abou Hashem
Submitted to
Dr. Doaa Salman
Contents
+ Introduction
+ Availability of Raw Materials
+ Export Capacity and Recent Investments
+ PESTLE analysis
+ Market of Cement in Saudi Arabia
+ Market Share
+ Market segmentation
+ Market type
+ Factors affect Supply
+ Factors affect Demand
+ Supply and Demand Curve
+ Elasticity of Supply
+ Elasticity of Demand
+ Conclusion 2
• Saudi Arabia is one of the largest producers of cement in
the world.
Introduction • Cement industry in Saudi Arabia is concentrated in the
central and western parts of the country.
• This distribution is largely due to the availability of raw
materials and proximity to key markets.
3
Availability of Raw
Materials
• The main raw materials used in the
production of cement are
limestone, clay, and gypsum.
• The country has significant
reserves of these materials, mainly
located in the central and eastern
regions.
4
Export Capacity and Recent Investments
+ Saudi Arabia is a major + The government of Saudi + Recent investments are
exporter of cement, with 30% Arabia has been providing aimed at increasing
of its total production incentives and support to production capacity and
exported to neighboring Gulf the cement industry to improving industry
countries promote its growth efficiency
5
PESTLE analysis
for the Saudi cement market
Political
● Political stability affects investment
decisions and regulations.
● Government policies such as
Vision 2030 and National
Transformation Program could
create opportunities for the
industry.
● Ongoing conflicts and tensions in
the region could impact trade and
exports.
7
Economical
+ Fluctuations in oil prices can + Large infrastructure + The COVID-19 pandemic
impact government spending projects such as the Red has impacted the economy
on infrastructure projects and Sea , Neom, and Qiddiya and demand for cement, but
demand for cement. Projects could drive stimulus packages have
demand for cement. been introduced to support
businesses.
8
Sociocultural
● Population growth and a younger
demographic could drive demand
for housing and infrastructure,
boosting demand for cement.
● Growing interest in sustainable
and eco-friendly construction
practices could lead to an
increased demand for alternative
building materials.
9
Technological
● Focus on reducing the carbon
footprint of cement production
through techniques such as carbon
capture and storage, alternative
fuels, and renewable energy
sources.
● Use of automation and robotics in
production and logistics to improve
efficiency and reduce costs.
10
Legal
● The Saudi Arabian government
introduced a competition law in
2019 aimed at promoting fair
competition and preventing anti-
competitive practices.
● Regulations have been
introduced to improve health and
safety standards in the industry.
11
Environmental
● Cement production is a major
contributor to greenhouse gas
emissions, accounting for around
7% of global emissions.
● The Saudi Arabian government has
introduced initiatives such as the
Saudi Green Initiative and the
Middle East Green Initiative to
promote sustainability and reduce
emissions.
12
Market of Cement
in Saudi Arabia
Market of Cement in Saudi Arabia
+ Saudi Arabia is the largest + Total capacity of 70 million + The country has 18 cement
producer of cement in the tons per year companies, and most of
Middle East them are listed on the Saudi
Stock Exchange
+ The cement industry in Saudi + the companies are
Arabia is highly competitive constantly expanding their
production capacities to
meet the growing demand.
14
Production capacity of major cement companies
in Saudi Arabia
Capacity
Company Name
(Million Tons per Year)
Saudi Cement Company 21.4
Southern Province Cement Company 19.5
Yamama Cement Company 19.5
Najran Cement Company 7
Eastern Province Cement Company 5.7
Tabuk Cement Company 3
Hail Cement Company 2.9
City Cement Company 2.8
Qassim Cement Company 2.8
Al Jouf Cement Company 2.7
15
Saudi cement market Share as of 2020
Capacity
Company Name
(Million Tons per Year)
Saudi Cement Company 18
Yamama Cement Company 12
Southern Province Cement Company 12
Najran Cement Company 10
Eastern Province Cement Company 8
Tabuk Cement Company 6
Hail Cement Company 4
Al Jouf Cement Company 4
City Cement Company
Northern Region Cement Company
4 The first
4
Qassim Cement Company 4 5
Arabian Cement Company 2
Yanbu Cement Company 2 companies
Saudi White Cement Company
Al Baha Cement Company
1
1 produced 60%
Riyadh Cement Company
Al Safwa Cement Company
1
1
of the total
Saudi Arabia Cement Company 1 supply
Al Madina Cement Company 1
16
Market Share (%)
11 1 1 11
2 1
2 18
4
Saudi Cement Company Yamama Cement Company
4 Southern Province Cement Company Najran Cement Company
Eastern Province Cement Company Tabuk Cement Company
4 Hail Cement Company Al Jouf Cement Company
12 City Cement Company Northern Region Cement Company
4 Qassim Cement Company Arabian Cement Company
Yanbu Cement Company Saudi White Cement Company
4
Al Baha Cement Company Riyadh Cement Company
Al Safwa Cement Company Saudi Arabia Cement Company
6 Al Madina Cement Company Al Moajil Cement Company
12
8
10
17
Market Segmentation
1- Product Type Cement can be segmented based on the type of cement
produced, such as
1.1 - Ordinary Portland Cement (OPC)
1.2 - Sulphate-Resistant Cement (SRC )
1.3 - White Cement.
2- Application Cement can be segmented based on the application it is
used for, such as
2.1 - residential construction
2.2 - commercial construction
2.3 - infrastructure projects
2.4 industrial construction
Market Segmentation
3 - End User: Cement can be segmented based on the end user, such as
3.1 – contractors
3.2 - builders
3.3 - cement distributors
3.4- retailers.
4 - Distribution Channel: Cement can be segmented based on the
distribution channel used, such as
4.1 direct sales to customers,
4.2 sales through wholesalers,
4.3 sales through retailers.
Market Segmentation
5 Geographical Region: Cement can be segmented based on the
geographical region it is produced and sold in, such as
5.1 - the Northern,
5.2 Southern,
5.3 Eastern, and
5.4 Western regions of Saudi Arabia.
Market
Type
• The Saudi cement market can be considered an oligopoly market type.
• This means that the market is dominated by a small number of large cement producers who have significant
control over the supply and price of cement in the market.
• The top five cement producers in Saudi Arabia, for example, account for a significant share of the market.
• As a result, these large players have the ability to influence prices and market conditions, and smaller players
may struggle to compete effectively.
• The market is also heavily regulated by the Saudi Arabian government, with strict rules and regulations in place
to ensure fair competition and quality control.
• Trade off decision between growth and environment is real challenging in complete industry
Factors Affect
Supply
22
There are several factors that can affect the supply of cement in the Saudi
Arabian market. Here are some of the main factors
Production Capacity Input Prices Energy Costs
The amount of cement that can be The prices of raw materials such as Energy costs, such as the cost of electricity
produced by manufacturers is a key factor limestone, clay, and gypsum that are used and fuel, can impact the production and
that affects the supply of cement. If the in cement production can impact the supply of cement. If energy costs increase,
production capacity of manufacturers supply of cement. If the prices of these then the cost of production increases,
increases, then the supply of cement will inputs increase, then the cost of production which can lead to a decrease in the supply
increase, and vice versa.. increases, and this can lead to a decrease of cement.
in the supply of cement.
23
There are several factors that can affect the supply of cement in the Saudi
Arabian market. Here are some of the main factors
Transportation Costs Government Regulations Weather Conditions
Transportation costs for raw materials and The Saudi Arabian government has strict Weather conditions can impact the
finished cement products can impact the regulations on cement production and production and transportation of cement,
supply of cement. If transportation costs import/export, which can impact the especially during the rainy season. If
production is disrupted or transportation is
increase, then the cost of production supply of cement. Changes in regulations
delayed due to weather conditions, then
increases, which can lead to a decrease in or policies can affect the production the supply of cement can be impacted.
the supply of cement. capacity of manufacturers, as well as the
import and export of cement.
24
Factors Affect
Demand
25
There are several factors that can affect the demand for cement in the Saudi
Arabian market. Here are some of the main factors
Economic Conditions Construction Activity Population Growth
The overall economic conditions in Saudi The level of construction activity in Saudi The growing population of Saudi Arabia is
Arabia, such as GDP growth, Arabia is a major factor that affects the a factor that can impact the demand for
unemployment rates, and consumer demand for cement. When there is a high cement. As the population increases, there
confidence, can impact the demand for level of construction activity, such as new is more demand for housing, schools,
cement. In general, when the economy is housing developments or large hospitals, and other infrastructure, which
growing and consumers are confident, the infrastructure projects, the demand for requires cement.
demand for cement increases. cement increases.
26
There are several factors that can affect the demand for cement in the Saudi
Arabian market. Here are some of the main factors
Government Spending Weather Conditions Competing Materials
The Saudi Arabian government has a Weather conditions can impact the Other building materials, such as steel and
significant impact on the demand for demand for cement, especially during the wood, can impact the demand for cement.
cement, as it invests heavily in summer months when construction If these materials become more cost-
effective or have other advantages, the
infrastructure projects. Government activity may slow down due to high
demand for cement may decrease.
spending on infrastructure, such as roads, temperatures.
bridges, and public buildings, can increase
the demand for cement.
27
Supply and Demand
Curve
28
Below are data collected to produce supply and demand
curves for the cement market in Saudi Arabia
Local Sales Export Sales Total Average Price
Year
(Million Ton) (Million Ton) (Million Ton) (SAR/Ton)
2011 45.9 19.3 65.2 278.60
2012 46.7 20.2 66.9 283.40
2013 47.5 19.9 67.4 284.40
2014 49.5 19.7 69.2 278.20
2015 50.3 18.3 68.6 274.60
2016 49.9 17.2 67.1 270.80
2017 51.5 16.6 68.1 256.20
2018 50.5 16.6 67.1 254.60
2019 49.5 18.4 67.9 262.60
2020 47.5 18.7 66.2 276.00
Table 3: Supply and Demand data 2011 - 2020
29
Supply Curve
Total Cement Production (Million tons)
290
280
Average Price (SAR/Ton)
270
260
250
240
230
65 66 67 68 69 70
Quantity Produced
Figure 2: Supply Curve
30
Demand Curve
Total Cement Demand in KSA (Million tons)
290
280
270
Average Price (SAR/Ton)
260
250
240
230
45 46 47 48 49 50 51 52
Quantity Sold
Figure 3: Demand Curve
31
Supply and Demand Curves
Cement Supply and Demand (Million tons)
290
280
Average Price (SAR/Ton)
270
260
250
240
230
40 45 50 55 60 65 70 75
Quantity Produced
Supply Demand
Figure 4: Supply and Demand Curves
32
Elasticity of Supply
Elasticity of
Elasticity of
Year Supply
Supply
(Value)
2011
2012 1.51 Inelastic
2013 2.11 Inelastic
2014 1.20 Inelastic
2015 0.67 Elastic
2016 1.59 Inelastic
2017 0.27 Elastic
2018 2.36 Inelastic
2019 0.38 Elastic
2020 0.51 Elastic
Table 4: Elasticity of Supply
33
Elasticity of Demand
Elasticity of
Elasticity of
Year Demand
Demand
(Value)
2011
2012 1.01 Inelastic
2013 4.82 Inelastic
2014 1.87 Inelastic
2015 1.23 Inelastic
2016 0.57 Elastic
2017 0.57 Elastic
2018 3.13 Inelastic
2019 0.65 Elastic
2020 0.83 Elastic
Table 5: Elasticity of Demand
34
Conclusion
The cement industry in Saudi Arabia is an important contributor to the country's economy, and its
growth is driven by the demand from the construction industry. The government's investment in
infrastructure projects and the increasing population are expected to drive the demand for cement in
the country in the coming years. The cement companies in Saudi Arabia are expanding their
production capacities to meet the growing demand and remain competitive in the market.
In conclusion, the supply and demand of cement in Saudi Arabia are influenced by various factors
such as production capacity, availability of raw materials, government policies, population growth,
urbanization, and construction industry. The pricing policy for cement in Saudi Arabia is determined
by the production costs, demand, competition, and government regulations. The cement industry in
Saudi Arabia has been growing steadily over the years, and the government's continued investment in
infrastructure projects is expected to further increase the demand for cement in the country. The
cement companies in Saudi Arabia must remain competitive and adjust their pricing policies based on
changes in the market conditions to maintain their profitability.
35
References
+ Aljazeera Capital. (2020). Saudi Cement
Sector Handbook.
+ IMARC Group. (2020). Saudi Arabia Cement
Market: Industry Trends, Share, Size, Growth,
Opportunity, and Forecast 2020-2025.
+ Mordor Intelligence. (2020). Saudi Arabia
Cement Market - Growth, Trends, and
Forecast (2020 - 2025).
+ Global Cement. (n.d.). Cement in Saudi
Arabia.
+ researchandmarkets.com (n.d.). Saudi Arabia
Cement Industry Overview.
36
+ Abdullah Labib Ibrahim Elgamal
+
Thank You
Aziz Yousef Aziz Yassin
+ Mohamed Adel Abd Elhameed Selim
+ Talaat Mohamed Amer Abou Hashem
37
