Saudi Arabia: Appetite for cement and steel to grow

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Massive high-rise tower constructions in capital city of Riyadh, Saudi Arabia. According to the latest reports, the booming real estate and construction industry in Saudi Arabia will continue to fuel tremendous growth for steel and cement in the coming years. Photo-Nicolas Fleury

The booming real estate and construction industry in Saudi Arabia will continue to fuel tremendous growth for steel and cement in the coming years.

The demand for cement will climb by an estimated 9.4 percent every year to over 80 million tons by 2017. This significant growth would be achieved on the back of huge spending plans in the public and private sector. The Kingdom plans to undertake several large-scale infrastructure projects to diversify its economy and reduce reliance on income earned through oil exports.

Another study reveals that the steel consumption will also continue to surge at a healthy rate of 19.5 percent during 2012-2015. The demand would be driven by construction of real estate and railways in the Kingdom. Rebar, which accounts for bulk of steel consumption in the Kingdom, is among the most attractive steel products in the local steel industry. The supply of rebar has failed to keep up with the demand due to a large number of construction projects. As a result, the country has become a major rebar importer.

The report, titled “KSA Steel Industry Forecast 2015“, reveals that Saudi Arabia has already become one of the largest steel consumers in the GCC region because of heavy investment in infrastructure and construction projects as envisioned in the Kingdom’s Ninth Development Plan 2010-2014. The demand is expected to grow at steady rate as the share of construction sector in GDP would increase to an estimated 5.9 percent by the end of 2014.

To meet the burgeoning cement requirements, the country will enhance its production capacity by more than 25 million tons by the end of 2017. The rising demand has also put pressure on cement prices, which have now been capped and the Saudi Ministry of Commerce has reintroduced the ban on export of both cement and clinker. However, Saudi Arabia may be in a position to export cement to regional markets by developing logistics, marketing and distribution capabilities.

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