SICO rules out price war in cement market, cites Yamama’s dominance

SICO Bank said Saudi Arabia’s cement market is not in the midst of a full-scale price war, but rather responding to individual moves by Yamama Cement Co., which effectively sets the tone for market pricing.

In a report, the bank said the current situation differs sharply from the 2018 price war, which was triggered by producers seeking cash flow amid weak demand, an export ban, and high debt levels across the sector.

SICO noted that Yamama Cement’s average selling price stood at SAR 122 per ton in the third quarter, indicating that the company may have sold large volumes near or below its estimated cash operating costs of SAR 90–95 per ton, a level it described as unsustainable.

The report said Yamama’s aggressive pricing strategy could be linked to the company’s ongoing transfer of production capacity from an old site to a new one. While this shift does not add new capacity, it is included in the sector’s total output, with the new plant expected to start operations before year-end. However, SICO said it is unlikely the company will maintain high utilization rates at the new site.

The bank added that Yamama may also be working to clear its clinker inventory at the old facility. It may additionally be reacting to early signs of slowing demand after a period of strong growth earlier in the year. Indicators such as lower mortgage issuances, a drop in new project awards, and a slight decline in retail prices suggest demand growth could ease in the near term.

SICO said these factors do not fully explain the scale of the company’s price cuts. It added that the widening gap between retail and realized prices increases the likelihood of a price rebound in the coming period.

According to data from Argaam, Yamama Cement led the sector in local sales during the third quarter with 2.56 million tons, up 66% from a year earlier, giving it an 18.6% market share.

The company’s third-quarter profit fell 63% to SAR 35.9 million, which the bank attributed to a decline in the average selling price.