Saudi Arabia Halts Cement Exports to Meet Local Market Needs

Saudi Arabia said it halted exports of cement and clinker to prevent shortages of the products and stabilize prices in the Arab world’s largest economy.

The kingdom’s western region, which includes the Red Sea port city of Jeddah and the Islamic holy cities of Mecca and Medina, has suffered a cement shortage as the government increased spending for infrastructure. Prices for new homes in Jeddah rose as much as 10 percent this month because of the higher cost of cement, al-Eqtisadiah reported Feb. 8.

Cement makers outside the western region, including Abha- based Southern Province Cement Co. (SOCCO), are required to regularly supply that area, Ahmed Bin Abdul Rahman, spokesman for the Ministry of Commerce and Industry said in a statement on the ministry’s website today.

“This is a common measure used by the authorities to regulate local demand,” said Kais Kriaa, an analyst at AlphaMena in Tunis. “The local demand problem is the supply variation from one region to another.”

Southern Province, the kingdom’s second largest cement producer by market value, will have to deliver the output of its new line to the western region, according to the ministry’s statement. The company said on Feb. 11 it started trial production on a 5,000 tons a day line at its Tihama plant and that commercial output will start next month.

The ministry said it may take “additional measures in the future to guarantee the availability and stability of this basic product.”

Cement production in the kingdom rose 23 percent in January from the same month a year earlier, according to industry data on the website of Yamamah Saudi Cement Co.

“The real solution to this problem in a sustained demand environment would be the increase of production capacity, especially in regions where supply is relatively low,” Kriaa said.

To contact the reporter on this story: Mourad Haroutunian in Riyadh at mharoutunian@bloomberg.net

To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net

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