By: Mohamed Idris
Riyadh – Mubasher: Saudi cement companies recorded a minor increase of 0.26% in July's sales to reach 3.13 million tonnes compared to 3.12 million tonnes in July 2015.
The companies' sales were surprising in terms of delivery volumes, lower production and growing inventories, giving discouraging signs for the third quarter and second half of 2016, Khalid Almadhyan, financial analyst at Riyad Capital, told Mubasher.
The analyst expected that August's statistics will be important as they will confirm whether the trend for rising or falling sales..
He added that June's deliveries reached low levels at 3.4 million tonnes, as June had 25 days of the month of Ramadan added to the low demand on the sector.
Moreover, July's deliveries reached the lowest monthly level since July 2015 at 3.07 million tonnes.
The sector's companies need to record monthly deliveries that exceed 4.5 million tonnes in the next two months to achieve a reasonable growth level exceeding 12.01 million tonnes in Q3-16.
Companies’ production volume was notably low reaching 3.2 million tonnes in July, mark a 12% decrease compared to the previous month.
Continued growing inventories will impact companies which are trying to avoid high inventory costs, the analyst said, noting that inventories for Tabuk Cement, North Cement and Arabia Cement increased on a monthly basis by 176%, 51% and 32%, respectively.
The analyst pointed to that Saudi Cement Co. owns the largest inventory in the sector, representing 17% of the total, followed by Yamama Cement and Yanbu Cement Co. with 15% each.
Translated by: Sara Ghali
