Cement companies in Saudi Arabia
The Saudi cement sector is the most diversified in the GCC, with five companies operating nine plants. The Saudi cement industry is the largest in the GCC, with a production capacity of more than 60 million tons at the end of 2007. The cement production capacity in the Kingdom reached 58.5 million tons in 2008, compared to 50.6 million tons in 2007 due to the opening of new factories by Yamama Cement Company and Saudi Cement, in addition to expansion projects by other producers.
As a result of higher oil and gas prices, which led to strong economic growth and increased construction activity, domestic cement consumption increased by 7.3% to reach 17.5 million tons in 2008, compared to 16.3 million tons in 2007. Cement demand is expected to grow at an annual rate compound of 5% between 2009 and 2013, to reach 21.8 million tons by 2013.
Saudi Arabia is the largest country in the Middle East and has the second largest proven oil reserves in the world. The country also has the fifth largest proven reserves of natural gas.
In terms of cement production, Saudi Arabia ranks in the top ten with a production capacity of around 58 million metric tons in 2017. This is expected to grow to around 65 million metric tons by 2020. There are a lot of cement companies in Saudi such as:
1) Yanbu Cement Company (YCC)
It is one of the largest cement producers in Saudi Arabia. The company's production capacity is 8 million tons of clinker and 9 million tons of cement. YCC was established in 1976 and is headquartered in Yanbu, Saudi Arabia. The company is a joint venture between the Saudi government and the Egyptian Suez Cement Company. Yamama Cement Company operates two cement plants in Yanbu. One plant with a capacity of 4 million tons of clinker and the other with a capacity of 5 million tons of clinker. YCC also operates two milling plants; One in Jizan with a capacity of 1.2 million tons and the other in Rabigh with a capacity of 0.5 million tons. YCC's total production capacity is 8 million tons of clinker and 9 million tons of cement.
2) Southern Province Cement Company (SPCC)
It is one of the largest cement companies in Saudi Arabia. The company is located about 100 km south of Jeddah. SPCC was established in 1977 with a production capacity of 1 million tons of cement per year. The company started its commercial production in 1979
3) Tabuk Cement Company (TCC)
It is the largest cement producer in Saudi Arabia with a market share of more than 50%. The company has been operating for more than 20 years and has an annual production capacity of 5 million tons of cement. TCC is a public company listed on the Saudi Stock Exchange with a market capitalization of SAR 10 billion.
4) Eastern Province Cement Company (EPCO)
EPPCO is the largest cement company in Saudi Arabia with a production capacity of 5 million tons of clinker and 8.4 million tons of cement annually. The company owns six cement factories in the Kingdom, two in Jeddah and Rabigh and one in Hofuf. It also has two factories in the UAE, one each in Fujairah and Ras Al Khaimah. EPPCO is a public company listed on the Tadawul Stock Exchange with a market capitalization of SAR 21 billion as of June 2018.
5) Al Safwa Cement Company (ASCC)
It is currently one of the leading cement companies in Saudi Arabia with a market share of approximately 20%. ASCC's current pricing strategy is to maintain relatively low prices in order to gain market share from its competitors. However, due to rising production costs, ASCC is now facing margin pressure and needs to increase its prices by 10% in order to maintain profitability.
There are several reasons for ASCC to increase its prices by 10%. First, as mentioned above, rising production costs have eroded ASCC's margins and the company needs to regain profitability. Second, ASCC has a strong brand and reputation in the market, which gives it pricing power. Third, the Saudi cement market is currently underpriced compared to other regional markets such as Kuwait and the UAE. Fourth, ASCC's major competitors are also facing similar cost pressures and are likely to increase their prices in the near future.
In conclusion, Al Safwa Cement Company must increase its prices by 10% to restore profitability and stay ahead of its competitors.
6) Hail Cement Company (HCC)
It has been in the business of manufacturing and selling cement for the past several years. Recently, I decided to enter the ready mix concrete (RMC) market. After carefully studying the market, HCC decided to set up a factory nearby
From RMC, Hail Cement Company has been in the business of manufacturing and selling cement for the past several years. Recently, I decided to enter the ready mix concrete (RMC) market. After carefully studying the market, HCC decided to set up an RMC factory near Rajasthan. The company is looking for a loan of Rs 300 crore from banks to finance this project. The company has promised to repay the loan within 5 years from the date of commencement of commercial production of the factory.
The company also prepared a detailed project report (DPR) for the construction of the RMC plant. DPR contains information about the company's current business, market opportunity for RMC, proposed product mix, plant capacity, technology to be used, raw material requirements, power and water requirements, land and infrastructure requirements, etc. Based on all these inputs, the DPR contains Detailed financial projections for setup and operation.
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