The Kingdom has allocated more than $17bn for transportation projects in 2013, according to economic researchers.
Kuwait Financial Center “Markaz” recently published the executive summary of its report on Saudi Arabia Roads and Railways.
In this report, Markaz examines and analyzes the current status of Saudi Arabia Roads and Railways sector.
The report highlights the market structure, growth trends, investments and current and potential projects in Saudi Arabia Roads and Railways sector.
The report also presents a SWOT analysis of Saudi Arabia Road and Railways sector.
According to the report, Saudi Arabia’s budget for 2013 has allocated a sum of $17.3 billion for Infrastructure and Transportation sector, an increase of 16 percent from previous year.
About $8 billion of this budget would be used in development of 3,700 km of roads, up gradation of existing and construction of new ports and airports.
The total value of projects that would be completed during 2013-2017 stands at about $25.5 billion.
From 1990 to 2011, the total length of asphalted and paved agricultural roads implemented by Saudi Ministry of Transport has grown by 11.22 percent per annum
Saudi Arabia being the largest nation in the GCC also has a well-developed road and railways network.
Saudi Arabia has in all 59,000 km of asphalted roads.
When compared to developed economies Saudi Arabia’s roads seem a bit more congested.
The massive increase in traffic, an outcome of the Kingdom’s industrial and agricultural development, has made road upgrade a necessity.
Saudi Arabia’s railways sector is in the phase of massive expansion.
Saudi Railways organization is responsible for construction and maintenance of Railway networks.
The existing Saudi railway network connects the port city of Dammam to the capital Riyadh.
The two lines currently operational are the 556 km–long single track line for the sole purpose of transporting freight, and the 449 km–long single track line for passenger trains.
Riyadh has maximum number of passengers either arriving to or departing from its station.
A large share of freight tonnage has been in transit between Damman and Riyadh state capital.
The total investment in railway sector from 2007-2013 amounts to around $7.9 billion.
The investments in Railways sector was predominantly on Railway Transport infrastructure and Rail Stations.
The investments on Rrail station transport terminals form about 4 percent of total investments in Railways projects.
The remaining 96 percent is in Railway Transport infrastructure.
Some large railway projects that are being planned or executed in Saudi Arabia are the Land Bridge, the Haramain High Speed Rail Project, ADA — Riyadh Light Rail Transit (Riyadh Metro), MOT-Jeddah Metro: Orange & Blue Line, Madinah Municipality — Medina Monorail, SRO — Minerals Railway.
SR17bn for Saudi airport, road and railway schemes
SR17bn for Saudi airport, road and railway schemes
IMF projects Saudi economy to grow 3.3% in 2025, 4.1% in 2026 amid global shifts
RIYADH: Saudi Arabia’s economy is projected to grow by 3.3 percent in 2025 and 4.1 percent in 2026, according to the latest forecasts from the International Monetary Fund.
These projections reflect significant shifts in the global economic landscape, with the ongoing OPEC+ agreement on oil production cuts playing a key role in tempering growth expectations for the Kingdom in the near term.
In its January 2025 World Economic Outlook Update, the IMF outlined the broader economic outlook for the Middle East and Central Asia, where growth is anticipated to rise by 3.6 percent in 2025, followed by a slightly stronger 3.9 percent in 2026.
These figures are notably lower than previous estimates, primarily due to downward revisions in Saudi Arabia’s growth forecast, which had initially projected a 4.6 percent expansion for 2025. As the region's largest economy, Saudi Arabia's performance significantly impacts the overall regional outlook.
In addition to the impact of oil production cuts, the IMF highlighted other challenges influencing the region's economic prospects, including inflationary pressures and ongoing global uncertainties. Despite these challenges, Saudi Arabia’s ambitious diversification initiatives under Vision 2030—which aim to expand non-oil sectors such as tourism, technology, and renewable energy—are expected to support long-term growth.
Global economic outlook
Globally, the IMF projects economic growth to stabilize at 3.3 percent in both 2025 and 2026, signaling a slowdown compared to previous years. Advanced economies are forecast to grow by 1.9 percent in 2025 and 1.8 percent in 2026, facing persistent challenges such as inflation, tightening monetary policies, and geopolitical tensions.
Among these advanced economies, the US is expected to lead with a growth rate of 2.7 percent in 2025, followed by a modest deceleration to 2.1 percent in 2026.
In contrast, emerging markets and developing economies are expected to grow at 4.2 percent in 2025 and 4.3 percent in 2026, buoyed by the strong performances of countries like India and China. India’s growth is forecast to remain robust at 6.5 percent, while China is projected to experience growth of 4.6 percent in 2025 and 4.5 percent in 2026.
Saudi Arabia’s short-term outlook
The reduction in Saudi Arabia’s 2025 growth forecast is largely attributable to the extended OPEC+ agreement, which continues to limit oil production in an effort to stabilize global oil prices. While these production cuts support oil price levels, they simultaneously constrain the Kingdom's oil revenues, a crucial element of its gross domestic product.
Despite the impact on short-term growth, Saudi Arabia is actively pursuing comprehensive economic reforms to reduce its dependency on oil. Initiatives such as the development of megaprojects like NEOM, as well as strategic investments in green energy and infrastructure, are designed to drive diversification and open new avenues for sustainable growth.
Sectoral diversification and Vision 2030
Saudi Arabia’s Vision 2030 initiatives are already showing promising results in diversifying the economy. Non-oil sectors, particularly tourism, have seen notable advancements. Efforts to position Saudi Arabia as a global destination have led to a surge in international visitors, contributing significantly to the Kingdom’s economic development.
Additionally, the financial sector and emerging industries such as technology and renewable energy are increasingly playing a pivotal role in boosting GDP growth. As the largest economy in the Middle East, Saudi Arabia remains a key driver of regional economic stability.
The IMF’s projections for the Middle East and Central Asia highlight that the region’s overall growth is heavily influenced by developments in Saudi Arabia. While other economies, including Egypt and Gulf states, are also undertaking significant reforms, Saudi Arabia continues to serve as the linchpin for regional economic performance.
Saudi Arabia tops GCC IPO market in 2024, raising $4.1bn across 42 offerings: Markaz
RIYADH: Saudi Arabia strengthened its role in the Gulf Cooperation Council’s initial public offering market in 2024, raising $4.1 billion through 42 listings, the highest number in the region.
According to the latest report from The Kuwait Financial Centre, also known as Markaz, the GCC region saw an increase of 23 percent in IPO proceeds compared to 2023, reaching a total of $13.2 billion across 53 public offerings.
This growth marks a significant rise from the $10.7 billion raised through 46 listings the previous year.
The Kingdom accounted for 31 percent of the region’s total IPO proceeds, making it the second-largest contributor after the UAE. The Saudi Exchange, Tadawul, witnessed 14 IPOs on its main market, collectively raising $3.8 billion. The parallel market, Nomu, also saw 28 IPOs, generating $297 million.
“Saudi Arabia’s IPOs, on both the main and parallel markets, recorded the highest performances post-listing compared to other GCC markets,” Markaz said.
The largest Saudi IPOs of the year included Dr. Soliman Fakeeh Hospital, Almoosa Health Group, and Nice One, all gaining significant investor interest.
The energy sector emerged as the top-performing sector, raising $3.7 billion, accounting for nearly 28 percent of total IPO proceeds in the region. This was primarily driven by Abu Dhabi’s NMDC Energy and Oman’s OQ Exploration and Production and OQ Base Industries, which attracted strong investor demand.
Following energy, the consumer staples sector secured $3.1 billion, or 24 percent of total IPO proceeds, with Lulu Retail Holdings, Spinneys, and Saudi Modern Mills Co. among the most prominent.
The consumer discretionary sector raised $2.7 billion, accounting for 20 percent of total proceeds, with major IPOs including Talabat, Nice One, and Abu Dhabi National Hotels Catering.
The healthcare sector followed closely, raising $1.4 billion, representing 10 percent of total proceeds, bolstered by offerings from Dr. Soliman Fakeeh Hospital and Almoosa Health Group in the Kingdom.
Meanwhile, the industrials sector generated $877 million across 11 offerings. Additionally, financial services contributed 5 percent, technology delivered 4 percent, and utilities and materials each accounted for 1 percent of the total proceeds.
For the third consecutive year, the UAE led the GCC IPO market, raising a total of $6.4 billion, which made up 49 percent of the region’s total IPO proceeds.
The UAE’s Abu Dhabi Securities Exchange contributed $3.6 billion through four IPOs, headlined by NMDC Energy and Lulu Retail Holdings.
Meanwhile, the Dubai Financial Market saw IPOs from Talabat, Parkin Co., and Spinneys, collectively raising $2.8 billion.
Saudi Arabia followed closely with a more diverse spread of IPOs across various market segments.
Oman saw significant IPO growth, raising $2.5 billion, marking its highest proceeds to date. The country’s two major IPOs, OQ Exploration and Production and OQ Base Industries were launched as part of the Oman Investment Authority’s divestment strategy. The OQEP IPO raised $2.0 billion, making it the largest in the nation’s history.
Kuwait made a return to the IPO market after a two-year gap, hosting the IPO of Beyout Investment Group Holding, which raised $147 million on Boursa Kuwait. Bahrain also saw IPO activity, with the Al Abraaj Restaurants Group raising $24 million, marking Bahrain’s first IPO since 2018. The company’s 35 percent stake sale accounted for 0.2 percent of the total GCC IPO proceeds.
The report revealed that more than 59 percent of GCC IPOs saw their shares surge within the first 30 days post-listing.
The Kingdom recorded the highest post-listing performance, with technology, healthcare, and consumer companies driving substantial gains. Among the standout IPOs was Miahona Co., which saw its stock price soar by 147 percent within its first month of trading. The firm had floated 30 percent of its capital on Tadawul’s main market in May.
Another major gainer was Purity for Information Technology Cop., whose stock jumped 118 percent within the first 30 days after debuting on Nomu in October.
On the downside, some IPOs saw declines, with Pan Gulf Marketing Co.’s shares dropping 35 percent post-listing after debuting on Nomu in February 2024. Similarly, Yaqeen Capital Co. fell 28 percent after its June IPO, reflecting investor concerns over certain market segments, particularly milling companies.
Most GCC stock sectors saw a positive performance in 2024, with the Dubai Financial Market leading the way with a 26.9 percent gain. Boursa Kuwait followed with a 12.4 percent increase, while Muscat Securities Market and Bahrain Bourse recorded modest gains of 1.3 percent and 1.2 percent, respectively.
Meanwhile, the Saudi Tadawul rose 0.6 percent, maintaining stability, while the Qatar Stock Exchange and Abu Dhabi Securities Exchange saw slight declines of -1 percent and -1.7 percent, respectively.
Saudi Arabia is projected to maintain strong IPO momentum, with over 50 IPOs expected in the next two years.
Seven IPOs have already gained regulatory approval and are set to launch in the first quarter of 2025. Other GCC countries, including the UAE, Qatar, and Oman, are also preparing for significant IPO activity.
Established in 1974, Markaz is a well-regarded asset management and investment banking institution in the MENA region, managing $4.56 billion in assets as of September.
Saudi Arabia’s real estate price index rises 3.6% in Q4, 2024: GASTAT
- Kingdom’s property market is projected to reach $69.51 billion in 2024 and $101.62 billion by 2029
- Rise was largely attributed to a 2.5% increase in residential land plot prices, which account for 45.7%
RIYADH: Saudi Arabia’s property sector maintained its growth trajectory in the fourth quarter of 2024, with the Kingdom’s real estate price index increasing by 3.6 percent year on year, official data showed.
According to the General Authority for Statistics, the growth was primarily driven by the residential real estate sector, which recorded a 3.1 percent rise compared to the same period in 2023.
The Real Estate Price Index, a key statistical tool, measures changes in property prices in Saudi Arabia based on transaction data across the Kingdom.
Developing the real estate sector is a core objective of Vision 2030, which aims to position Saudi Arabia as a global hub for tourism and business.
According to the Real Estate General Authority, the Kingdom’s property market is projected to reach $69.51 billion in 2024 and $101.62 billion by 2029, with a compound annual growth rate of 8 percent.
“Data indicates that real estate prices in the residential sector experienced varying increases in the fourth quarter of 2024 compared to the same quarter of the previous year. The residential sector recorded an overall increase of 3.1 percent, with a weighting of 72.6 percent in the index.,” said GASTAT.
The rise was largely attributed to a 2.5 percent increase in residential land plot prices, which account for 45.7 percent of the index. Apartment prices rose by 2.9 percent, while villa prices saw a sharper uptick of 6.5 percent.
However, prices for residential floors registered a slight decline of 0.7 percent year on year in the fourth quarter of 2024.
The commercial real estate sector experienced a 5 percent year-on-year price increase, primarily driven by a 5.2 percent rise in commercial land plot prices. Building prices also grew by 5.1 percent, while prices for galleries and shops declined by 1.7 percent.
Property prices rose by 2.8 percent during the quarter compared to the same period in 2023 in the agricultural sector.
Regional price trends
In the Riyadh region, real estate prices rose by 10.2 percent in the fourth quarter of 2024 compared to the same period in 2023, while property expenses in Najran and Tabuk increased by 4.6 percent and 1.1 percent, respectively, during the same period.
Real estate prices in Makkah declined by 0.6 percent, and property expenses in the Eastern Province dropped by 4.6 percent.
GASTAT also reported that property prices in Al -aha and Asir experienced significant declines of 16.7 percent and 7.3 percent in the fourth quarter compared to the same period in 2023.
Quarterly comparison
Compared to the third quarter of 2024, the real estate price index increased by 1.6 percent in the fourth quarter, influenced by a rise in the expenses of the residential sector which went up by 1 percent.
Prices for residential land plots increased by 0.9 percent quarter on quarter, while apartments and villas saw price hikes of 0.5 percent and 2.4 percent, respectively.
In the commercial sector, prices grew by 2.7 percent quarter on quarter. Agricultural property prices fell by 9.8 percent, with a corresponding drop in agricultural land prices.
Nuclear power industry needs $120bn a year by 2030
- Private sector is increasingly viewing nuclear energy as an investible energy source
RIYADH: Nuclear energy development funding needs to double to $120 billion a year by 2030 to meet the rising demand for infrastructure development, according to an analysis.
In its latest report, the International Energy Agency said that both public and private investments are needed to meet the rising financial needs in the sector.
According to the analysis, ensuring the predictability of future cash flows is key to bringing down financing costs and attracting private capital to the nuclear sector.
The analysis from IEA comes at a time when countries such as Saudi Arabia are actively exploring ways to ramp up nuclear programs to diversify their energy mix.
“Public funding alone will not be sufficient to build a new era for the nuclear energy sector. Private financing will be needed to scale up investments,” said IEA.
It added: “The private sector is increasingly viewing nuclear energy as an investible energy source with the promise of firm, competitive, clean power that can serve energy-intensive operations 24/7.”
IEA suggested that a supportive regulatory framework that increases visibility, including limiting liabilities, is crucial for debt financing in the nuclear energy sector, as financial institutions lend based on reliable future cash flow expectations.
“Long-term power purchase agreements can also be underwritten by large consumers, who can lock in future supplies of electricity at average cost. These arrangements can also open the door to proven commercial financing instruments, such as green bonds, supported by accommodating regulations and taxonomies,” said IEA.
It’s clear today that the strong comeback for nuclear energy that the IEA predicted several years ago is well underway, with nuclear set to generate a record level of electricity in 2025.
Fatih Birol, executive director of IEA
In a separate analysis published on Jan. 15, the Atlantic Council, an American think tank in the field of international affairs, echoed similar views and said the COP28 goal of tripling nuclear energy capacity is within reach, if investments are deployed in the sector in an adequate manner.
Amy Drake, assistant director at the Nuclear Energy Policy Initiative with the Atlantic Council Global Energy Center said that tripling nuclear energy capacity would require upwards of $150 billion in annual global investment by 2050.
“Private investment — in addition to government-backed initiatives — is critical to accelerate nuclear energy deployment at scale. Leaders in the nuclear energy industry must continue to engage with banks and financial institutions to mobilize capital to support anticipated levels of growth,” said Drake.
She added: “Deploying new nuclear energy projects at scale will require global leaders to translate pledges into action. Multilateral engagement, backing from the financial sector, and buy-in from new customers could deliver major wins for nuclear energy.”
IEA forecasts record nuclear energy generation in 2025
According to the report, electricity generated using nuclear power is expected to reach unprecedented levels this year, accounting for nearly 10 percent of global production — with a further 63 nuclear reactors currently under construction.
“It’s clear today that the strong comeback for nuclear energy that the IEA predicted several years ago is well underway, with nuclear set to generate a record level of electricity in 2025,” said Fatih Birol, executive director of IEA.
He added: “In addition to this, more than 70 gigawatts of new nuclear capacity is under construction globally, one of the highest levels in the last 30 years, and more than 40 countries around the world have plans to expand nuclear’s role in their energy systems.”
Ushering a new era in nuclear energy sector
The energy think tank said that renewed momentum behind nuclear energy has the potential to open a new era for the secure and clean power source as demand for electricity grows strongly around the world.
The agency added that the nuclear energy sector is showing a fresh impetus of growth driven by new policies, projects, investments and technological advances, such as small modular reactors.
“SMRs in particular offer exciting growth potential. However, governments and industry must still overcome some significant hurdles on the path to a new era for nuclear energy, starting with delivering new projects on time and on budget — but also in terms of financing and supply chains,” added Birol.
IEA highlighted that SMRs can dramatically cut the overall investment costs of individual projects to levels similar to those of large renewable energy projects such as offshore wind and large hydro, which makes these projects less risky for commercial lenders.
Deploying new nuclear energy projects at scale will require global leaders to translate pledges into action.
Amy Drake, assistant director at the Nuclear Energy Policy Initiative
Another major positive factor that could drive the growth of SMRs is their modular design which will significantly cut construction times, with projects expected to reach cash flow break-even up to 10 years earlier than for large reactors.
“The strong credit rating of the technology players behind data centers can also facilitate financing for SMR projects targeting this sector,” added the energy agency.
Last year, some of the world’s largest tech firms announced big commitments to invest in nuclear energy projects, including agreements between Google and Kairos Power, Amazon and X-energy, and Microsoft and Constellation Energy.
Atlantic Council said that partnerships between so-called Big Tech and reactor companies marked some of the most promising developments toward establishing demand at scale.
“The partnerships illustrate the potential for financial mechanisms, such as power purchase agreements, to de-risk investments in novel projects. Using these developments as a blueprint, nuclear energy providers should work closely with other energy-intensive sectors, such as heavy manufacturing, as demand for clean electricity surges worldwide,” said Drake.
IEA also highlighted the importance of the government’s role in strengthening the nuclear energy sector, which includes providing incentives and public finance. The report added that this power source can provide services and scale that are difficult to replicate with other low-emissions technologies.
“Taking advantage of this opportunity requires a broad approach from governments, encompassing robust and diverse supply chains, a skilled workforce, support for innovation, de-risking mechanisms for investment as well as direct financial support, and effective and transparent nuclear safety regulations, alongside provisions for decommissioning and waste management,” the IEA report added.
The analysis also highlighted the demographic and geographic distribution of nuclear power plants globally, with most of the existing nuclear power fleet today being in advanced economies, but many of those plants were built decades ago.
IEA added that the global map for nuclear energy is changing, with the majority of projects under construction in China, which is on course to overtake both the US and Europe in installed nuclear capacity by 2030.
Of the 52 reactors that have started construction worldwide since 2017, 25 are of Chinese design and another 23 are of Russian design.
“Today, more than 99 percent of the enrichment capacity takes place in four supplier countries, with Russia accounting for 40 percent of global capacity, the single largest share,” said Birol.
He added: “Highly concentrated markets for nuclear technologies, as well as for uranium production and enrichment, represent a risk factor for the future and underscore the need for greater diversity in supply chains.”
Saudi Arabia is also looking to play its part in the development of the energy source.
Launched in 2017, the Kingdom’s National Atomic Energy Project is a cornerstone of the government’s strategy to diversify its energy sources and reduce its dependence on fossil fuels.
The project aims to integrate nuclear power into the national energy mix, enhancing sustainability and fulfilling international commitments.
Earlier in January, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said that the Kingdom is planning to begin enriching and selling uranium.
Domestic demand propels Saudi cement sales up 12 percent
- Growth was primarily driven by strong domestic demand, accounting for 96 percent of total sales
RIYADH: Cement sales in Saudi Arabia saw an annual increase of 12.33 percent in the fourth quarter of 2024, reaching 14.87 million tonnes, according to recent data.
Figures released by Al-Yamama Cement showed this growth was primarily driven by strong domestic demand, accounting for 96 percent of total sales, while exports comprised the remaining 4 percent.
For the full year of 2024, cement sales exhibited a more moderate growth of 3.67 percent, culminating in a total volume of 51.15 million tonnes.
Amr Nader, CEO and co-founder of cement consultancy A3&Co. told Arab News: “These figures may not fully align with the anticipated surge in demand from ambitious infrastructure projects.”
He added: “Megaprojects such as NEOM, The Red Sea Project, and FIFA World Cup-related developments require vast quantities of construction materials, the maximum anticipated demand in the next 5 years is 78 million tonnes annually.”
According to Nader, with current market dynamics characterized by oversupply, utilization rates are projected to remain below 80 percent for the next 10 years, falling short of both installed capacity and anticipated maximum utilization levels.
Among the 17 Saudi cement companies, Al-Yamama Cement led the domestic market in the fourth quarter, capturing a 12.84 percent share with sales of 1.83 million tonnes, a substantial 22 percent increase year-over-year.
Following the successful acquisition of Hail Cement Company, Qassim Cement Company solidified its position as the second-largest player in the domestic market, capturing an 11.43 percent market share, equivalent to 1.63 million tonnes of cement sales.
Yanbu Cement, and Southern Cement were the next largest players in the domestic market, holding 10.27 percent, 8.51 percent, and 7.75 percent market shares, respectively.
Al Jawf Cement demonstrated the highest growth in domestic sales, achieving a 38 percent increase to 468k tonnes during this period, despite holding a relatively small 3.28 percent market share.
United Cement followed closely with a 31.55 percent annual increase in local sales, reaching 613k tonnes. Eastern Cement also experienced strong growth, recording a 27.96 percent increase to 723k tonnes.
In terms of cement exports, Saudi Cement dominated with 80.10 percent of total shipments, amounting to 487k tonnes that quarter. This figure represents a 71 percent increase compared to the same period of 2023.
Najran Cement accounted for 14.64 percent of exports, totaling 89k tonnes, marking a 2.2 percent decline. Eastern Cement with 5.26 percent share saw a 60 percent rise in exports, reaching 32k tonnes.
Saudi Arabia’s cement sector plays a critical role in the Kingdom’s industrial landscape, supporting a booming construction market driven by massive infrastructure projects under the Vision 2030 initiative.
As one of the largest cement producers globally, Saudi Arabia’s cement industry is well-positioned to meet the growing demand spurred by developments like NEOM, the Red Sea Project, and FIFA World Cup-related construction.
The sector faces significant challenges, however, including oversupply, rising fuel costs, and the need for environmental sustainability. Despite these hurdles, it remains resilient due to government support and strong domestic demand, which accounts for the majority of sales.
Clinker production and sales
According to data from Al-Yamama Cement, Saudi cement companies produced 14.89 million tonnes of clinker in the fourth quarter of 2024, a 7 percent increase from the same quarter of 2023, and held 135.32 million tonnes of clinker stock, a 14 percent annual rise.
Saudi Arabia also exported 1.15 million tonnes of clinker during this period, marking a 28 percent decline compared to the same period of the previous year.
Clinker, a crucial intermediate product in cement production, is commonly exported due to its cost-effectiveness. It is more economical to ship it to other countries for final processing into cement than to produce the finished product and then export.
Several factors contributed to the significant clinker inventory buildup observed. A key factor according to Nader was a mismatch between supply and demand.
A highly competitive market have driven producers to maintain high production levels to capture market share.
Amr Nader, CEO and co-founder of A3&Co.
The expert explained that while domestic cement sales surged, the decline in clinker exports contributed to a domestic oversupply. This imbalance was further exacerbated by the increase in clinker production, driven in part by an oversupply situation stemming from installed capacity consistently exceeding domestic demand by more than 30 percent.
This means there’s more capacity to produce clinker than is actually needed for the domestic market.
Nader added: “A highly competitive market has driven producers to maintain high production levels to capture market share, and low cost to meet the price pressure generated by oversupply on the local market despite subdued export demand.”
He went on: “There is also stockpiling strategy where companies have deliberately built inventories in anticipation of future demand spikes from megaprojects like NEOM and FIFA World Cup-related initiatives and due to anticipated further increase in fuel prices.”
The consultant attributed the low demand for cement to infrastructure delays, stemming from regulatory hurdles or logistical challenges, which have slowed the pace of construction projects, consequently reducing the immediate consumption of clinker.
Managing oversupply and rising fuel costs
The cement market is currently facing two major challenges — high inventory risks and rising fuel prices.
According to Nader, to mitigate the risks associated with high clinker inventory levels, Saudi cement companies can implement several strategies.
Strengthening export channels to emerging markets in Africa and Asia, where clinker demand is growing, through competitive pricing and improved logistics can help expand export footprints.
Exploring innovative applications for clinker, such as blending it into specialized cement products for niche markets like marine construction or precast solutions, can diversify revenue streams.
Furthermore, adjusting production schedules to align with actual demand can help reduce unnecessary inventory buildup. Finally, collaborating with megaproject developers to secure long-term supply agreements can stabilize clinker consumption and provide a more predictable demand outlook.
According to Nader, the rise in fuel prices, methane, ethane, and diesel, is expected to increase production costs significantly, especially in energy-intensive processes like clinker manufacturing.
However, Saudi cement companies are well-positioned to manage this challenge by passing on the added costs to customers.
With a regulatory price cap of SR240 ($63.97) per tonne, there is still considerable room for price increases before reaching the limit, as the current market price remains approximately SR50 per tonne below the cap, he said.
This provides companies a substantial buffer to adjust prices without violating the cap. Additionally, Saudi Arabia’s cement sector enjoys the highest global average net profit, further enhancing its resilience to cost pressures.
Nevertheless, the expert said that despite this pricing flexibility, fierce competition and an oversupplied market may constrain price hikes. Companies seeking to maintain market share could face challenges in fully transferring costs, as supply currently outpaces demand.
To mitigate cost pressures, Nader said that firms may adopt strategies like improving energy efficiency, switching to alternative fuels like waste-derived fuels or biomass, and optimizing operations.
Government initiatives also provide support, with incentive programs offering up to SR60 million annually for some manufacturers. These incentives are designed to assist cement companies in adopting greener technologies, improving energy efficiency, and reducing carbon emissions.
Additionally, the government is working on long-term solutions to address energy challenges, such as plans for a national natural gas pipeline to phase out liquid fuels and meet the sector’s growing energy demands.
These efforts are part of Saudi Arabia’s broader vision to decarbonize heavy industries and align with global sustainability goals under its Vision 2030 strategy.
Cement alternatives
As construction costs rise, analysts suggest that turning to supplementary cementitious materials and innovative technologies like carbon capture and storage, offers a viable path for developers seeking cost-effective and sustainable solutions.
These alternatives not only align with global sustainability goals but also promise long-term economic and environmental benefits. This can reduce reliance on traditional concrete and cement, which alone accounts for approximately eight percent of global CO2 emissions.
However, Nader challenged the feasibility of significantly replacing cement with alternative materials.
He emphasized that the current global supply of these alternatives is less than five percent of total cement production, making large-scale substitution impractical.
Given Saudi Arabia’s position as one of the top 10 global cement producers, a dramatic shift away from cement would pose substantial investment risks. Instead, Nader underscored the importance of operational and material efficiency technologies, which could achieve a 35 percent reduction in carbon emissions by 2035 with positive cost implications for manufacturers.
He further noted that carbon capture, utilization, and storage, known as CCUS, should be viewed as a last-resort technology for residual carbon capture, targeting post-2040 timelines, after readily available decarbonization strategies have been fully adopted.
Saudi Arabia has already taken steps in this direction by launching an Industrial Excellence Center to support sector-wide decarbonization efforts.
