The cement market is not experiencing an all-out price war, but rather individual pricing moves driven by Yamama Cement, which effectively controls the market’s direction, SICO Bank stated in its recent report.
SICO explained that the current situation is completely different from the price war seen in 2018, which was driven by producers’ attempts to generate cash flow amid weak demand, an export ban, and high debt levels across the sector.
The report noted that the company’s selling price reached SAR 122 per ton in the third quarter, indicating that it may have sold large volume near or below its estimated cash operating cost of SAR 90–95 per ton — a level that is unsustainable.
SICO attributed the company’s aggressive pricing strategy to several factors, including:
– The company is currently relocating production capacity from an old site to a new one. This is not new capacity per se, but rather a transfer of existing capacity, which nonetheless adds to the sector’s total production capacity. The new plant is expected to start operations before year-end, although it is unlikely that the company will maintain consistently high utilization rates at the site.
– The company may be seeking to fully liquidate its clinker inventory stored at the old site.
– The company may have started to notice a slowdown in demand following a period of strong growth since the beginning of 2025 — when demand reached its highest level in years. Key indicators such as the decline in mortgage issuance, a decrease in new project awards, and a slight drop in retail prices suggest that demand growth could slow in the near term.
However, SICO bank stressed that these factors alone do not fully explain such a sharp price reduction.
SICO believes that the widening gap between retail prices and actual realized prices increases the likelihood of prices returning to normal levels soon.
According to Argaam data, Yamama Cement topped the sector in terms of domestic sales volumes, selling 2.564 million tons in the third quarter — a 66% increase — and capturing an 18.6% share of total market sales.
Yamama Cement’s profits fell 63% to SAR 35.9 million by the end of the third quarter, which the company attributed to a decline in the average selling price during the period.
The cement market is not experiencing an all-out price war, but rather individual pricing moves driven by Yamama Cement, which effectively controls the market’s direction, SICO Bank stated in its recent report.
SICO explained that the current situation is completely different from the price war seen in 2018, which was driven by producers’ attempts to generate cash flow amid weak demand, an export ban, and high debt levels across the sector.
The report noted that the company’s selling price reached SAR 122 per ton in the third quarter, indicating that it may have sold large volume near or below its estimated cash operating cost of SAR 90–95 per ton — a level that is unsustainable.
SICO attributed the company’s aggressive pricing strategy to several factors, including:
– The company is currently relocating production capacity from an old site to a new one. This is not new capacity per se, but rather a transfer of existing capacity, which nonetheless adds to the sector’s total production capacity. The new plant is expected to start operations before year-end, although it is unlikely that the company will maintain consistently high utilization rates at the site.
– The company may be seeking to fully liquidate its clinker inventory stored at the old site.
– The company may have started to notice a slowdown in demand following a period of strong growth since the beginning of 2025 — when demand reached its highest level in years. Key indicators such as the decline in mortgage issuance, a decrease in new project awards, and a slight drop in retail prices suggest that demand growth could slow in the near term.
However, SICO bank stressed that these factors alone do not fully explain such a sharp price reduction.
SICO believes that the widening gap between retail prices and actual realized prices increases the likelihood of prices returning to normal levels soon.
According to Argaam data, Yamama Cement topped the sector in terms of domestic sales volumes, selling 2.564 million tons in the third quarter — a 66% increase — and capturing an 18.6% share of total market sales.
Yamama Cement’s profits fell 63% to SAR 35.9 million by the end of the third quarter, which the company attributed to a decline in the average selling price during the period.
