RIYADH: Cement sales in Saudi Arabia saw an annual increase of 1.8 percent in the second quarter of 2024, reaching 10.85 million tonnes, according to recent data. Figures released by Al-Yamama Cement showed that 95 percent of these sales were domestic, with only 5 percent being exported. The data covers 17 Saudi cement companies, with Al-Yamama holding the largest share of domestic sales at 12 percent, amounting to 1.28 million tonnes, despite a 7 percent decline during the period. Qassim Cement followed with a 10 percent share, selling 1.06 million tonnes domestically. Valued at $1.07 billion in 2023, Saudi Arabia’s cement market is poised for robust growth, with an anticipated compound annual growth rate of 6.10 percent through 2029, according to ResearchAndMarkets.com, a global market research firm. The Kingdom’s ambitious Vision 2030 initiative, which emphasizes infrastructure development across sectors like transportation, utilities, healthcare, and tourism, is a major driver of the cement industry’s growth. Large-scale projects, including the Riyadh Metro and mega-projects like NEOM and Qiddiya, are significantly boosting demand, reinforcing its vital role in Saudi Arabia’s construction industry. Saudi Cement, Yanbu Cement, and Southern Cement each held a 9 percent share of the domestic market in the second quarter of 2024, with sales of around 920,000 tonnes each. The highest growth in domestic sales was recorded by Umm Al-Qura Cement, which saw a 68 percent increase to 371,000 tonnes during this period, despite holding a relatively small 4 percent market share. Hail Cement’s sales rose by 49 percent to 407,000 tonnes, while City Cement experienced a 45 percent increase, reaching 617,000 tonnes. In terms of exports, Saudi Cement dominated with 79 percent of total shipments, amounting to 404,000 tonnes this quarter, though this figure represents a 16 percent decrease compared to the same quarter last year. Najran Cement accounted for 13 percent of exports for the quarter, totaling 66,000 tonnes, marking a 16 percent increase. Eastern Cement saw a 27 percent rise, reaching 42,000 tonnes. Riyadh, the political and economic capital, held the largest market share of the industry in 2023, reflecting its central role in the Kingdom’s infrastructure ambitions, added the report. The city’s rapid population growth and urbanization have led to increased demand for residential, commercial, and industrial constructions, all reliant on cement. Riyadh’s position as a hub for corporate, financial, and industrial activities further amplifies this demand, making it a focal point for sustained cement consumption, according to the agency. The market is also witnessing a digital transformation, with Industry 4.0 technologies being integrated into production processes. Cement manufacturers are investing in smart factory solutions, artificial intellignce, Internet of Things, and digital twins to optimize efficiency, reduce costs, and improve product quality. These innovations are set to revolutionize the industry, positioning companies that embrace digital transformation for long-term success in a rapidly evolving market. In its June report, ResearchAndMarkets.com highlighted a prominent trend in Saudi Arabia’s cement market: the growing focus on sustainability and the adoption of green cement technologies. As awareness of environmental impact and regulatory pressures increase, cement manufacturers are shifting toward sustainable practices to reduce carbon emissions and minimize their ecological footprint. In June, Hoffmann Green Cement Technologies, a French low-carbon cement firm, began constructing its first production unit in Saudi Arabia, known as H-KSA 1, after laying the foundation stone at the Rabigh site. This follows a 22-year licensing agreement signed last year with Saudi Arabia’s Shurfah Group. The partnership aims to establish four low-carbon cement production units to support the decarbonization of Saudi Arabia’s construction sector, aligning with Vision 2030. Shurfah Group will finance, build, and operate these units, exclusively marketing Hoffmann Green Cement’s products in the Kingdom. The first factory is expected to be completed by the end of 2025. Saudi Arabia’s Al Jouf Cement Co. has signed a deal worth SR104 million ($27.7 million) with Italy’s Webuild SpA to supply cement for various NEOM projects. The contract, spanning 41 months, could see additional quantities of cement supplied, and is expected to positively impact Al Jouf’s financial performance from the third quarter of 2024 onward. NEOM, a $500 billion mega-project located along the northern Red Sea, continues to advance with several key developments. Among these is the Jaumur community, an exclusive residential area with 6,000 residents, including 500 marina apartments and 700 luxury villas, set around a marina promenade. In addition, NEOM and Equinox Hotels are planning a luxury resort on the Gulf of Aqaba as part of the Magna development, which will feature 15 hotels, 1,600 rooms, and 2,500 residences along 120 km of coastline. Other major projects include the NEOM Trojena Ski Village, built in partnership with Emirates Steel and Eversendai, and The Line, a 170-km mirrored structure. Trojena, located 50 km from the Gulf of Aqaba, spans 60 sq. km and includes mountainous elevations up to 2,600 meters. Market challenges Despite the anticipated growth for the industry, there are challenges. Regulatory compliance, particularly regarding environmental standards, adds operational complexity and costs for cement producers. Additionally, the industry faces market oversupply and price volatility, exacerbated during periods of economic slowdown. According to ResearchAndMarkets.com Saudi Arabia has enforced strict environmental regulations to reduce the impact of industrial activities on air quality, water, and biodiversity. Cement plants must meet specific emission limits for pollutants like particulate matter, nitrogen oxides, and sulfur dioxide, which requires significant investment in pollution control technologies. These regulatory changes create uncertainty and may cause project delays as companies continuously adapt. Compliance is further complicated by differences between national and local regulations, requiring coordination between industry stakeholders and government bodies. To navigate these challenges, cement manufacturers must engage with regulators, invest in sustainable technologies, and adopt strong environmental management practices. Balancing these efforts with operational efficiency is essential for long-term growth and competitiveness in Saudi Arabia’s cement market. Another challenge highlighted in the report is market oversupply and price instability. Overcapacity, often worsened by economic slowdowns or reduced construction activity, leads to intense price competition among manufacturers. This environment pressures companies to maintain profitability and operational viability, as excess supply drives prices down. During economic downturns, diminished demand for cement exacerbates these issues, resulting in inventory buildup and increased storage costs, further straining financial resources. To address these challenges, cement manufacturers must engage in strategic planning and risk management. This includes aligning production with market demand, diversifying product offerings, exploring export opportunities, and collaborating within the industry to rationalize production capacities.