Saudi Arabia is facing a shortage of cement, or at least cement that people can afford to buy, Arab News reports. Although the Kingdom produces 1% of the world’s cement (2010 figure), its construction needs far surpass that quantity. Imports of all kinds have grown more expensive, though, and cement is not an exception.

Not terribly surprisingly, black marketers have descended. Cement is available, at a price, but without any paperwork. That leads to a situation fraught with the potential of problems. Not all cement is created equal or is to be used in the same way in all uses. Cutting corners or using the wrong materials leads to catastrophic failure, as we’ve seen in countries ranging from the US and Canada to Nigeria, S. Korea, and Egypt. Venality and short-term profits, though, have a way of taking precedence over safety.

Cement crisis worsens
ARAB NEWS

JEDDAH: A cement crisis resulting from illegal trading and a steep hike in prices is spreading from Jeddah and Madinah to other major cities and regions in the Kingdom.

In Jeddah a bag of cement now costs over SR25 and most dealings take place through middlemen whereas in Madinah the prices of cement per bag have shot up by SR20.

Subsequently, prices of ready-mix concrete shot up 30 percent in Jeddah and other parts of the western region. Ready-mix concrete manufacturers attributed the steep hike in prices to a five-week long crisis in cement supply. According to a report in Al-Eqtisadiah business daily, a number of ready-mix concrete factories in the Eastern Province hiked the prices of liquid cement Wednesday.


February:02:2012 - 09:11 | Comments & Trackbacks (2) | Permalink
2 Responses to “Sticking Together:
Cement Shortage Hits Saudi Arabia”
  1. 1
    Solomon2 Said:
    February:02:2012 - 13:58 

    I imagine the “black market” problem – as described, seemingly a case of market confusion – can be solved by crafting cement futures contracts with delivery and storage points in Jeddah and Dubai.

    I don’t doubt the CME would be glad to establish these if the Saudi royals asked. Certifying warehouses and quality control would take about a year, I guess.

  2. 2
    John Burgess Said:
    February:02:2012 - 14:50 

    That would do it, as long as no one could cast it as a gamble. I’m not sure how Shariah-compliant finance views futures contracts, actually.

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