Riyadh - Mubasher: The Saudi cement industry exhibited a moderate rise of 11% in the demand for cement during the first five months of 2020, compared to the same period in 2019, amidst the imposed lockdown due to the coronavirus (COVID-19).

Al Rajhi Capital expects the cement volume for the first half (H1) of 2020 to grow by nearly 10% from H1-19, according to a research note issued on Wednesday.

Quarter-on-quarter (QoQ), cement volumes declined by almost 50% when compared to the first two months of Q1 and Q2 of the year. This comes in line with the research company’s earlier estimates.

According to the report, companies like Qassim Cement Company (QCC) and Yanbu Cement Company reported the highest year-on-year (YoY) growth of 21% and 18%, respectively, during April and May 2020 combined.

In contrast, Saudi Cement Company and Arabian Cement Company reported annual degrowth of 4% and 2% for a similar period.

Going forward, Al Rajhi assumes the kingdom’s cement demand would make an uptrend, although flattish, backed by the reopening of the economy.

The industry is seen to witness moderate volume growth of around 4% to 5%, versus prior estimates of a 6-7% growth, for the next couple of years.

The sector will continue to face certain headwinds such as lower government spending and slow economic recovery from COVID-19. However, motivators such as the robust mortgage growth would encourage increased construction, hence, supporting cement demand.