The economic relations between the Kingdom of Saudi Arabia and the People's Republic of China have seen exceptional development over the past two decades, now representing a model of strategic cooperation in energy, investment, and infrastructure. China is at the forefront of Saudi Arabia's trade partners, especially in the energy sector, where Beijing heavily relies on Saudi crude oil to meet its growing industrial needs. On the other hand, the Saudi leadership is keen on diversifying national income sources and reducing dependence on oil through the implementation of Vision 2030, which has made attracting foreign investments, particularly from China, a key focus in mega infrastructure projects such as NEOM, the Red Sea Project, and the Jafurah gas project.
These economic interconnections have not been limited to trade exchange but have extended to significant industrial and technological partnerships, which have clearly reflected on the Saudi cement sector. Chinese investments have contributed to the growth of cement production and sales in Saudi Arabia, enhancing local demand due to major projects executed by both Chinese and Saudi partners alike. At the same time, these transformations have created high competitiveness within the sector, pushing Saudi companies to adopt expansion plans and strategic mergers to keep pace with changes in supply and demand.
In this article, we detail how Saudi-Chinese relations have impacted the Saudi cement sector, supported by the latest data and financial indicators, analyzing market dynamics and competition, while addressing recent regulatory and investment developments in the sector. We also highlight the conditions of major companies, especially Hail Cement Company after the acquisition by Qassim, and review the challenges and prospects of the sector in light of ongoing Saudi-Chinese cooperation.
Economic Relations Between Saudi Arabia and China: A Growing Strategic Partnership
The economic relations between Saudi Arabia and China represent one of the most dynamic trade and investment links in the Middle East. Since the signing of the comprehensive strategic partnership between the two countries in 2016, there has been a significant increase in the volume of trade exchange and mutual investments. China plays a pivotal role in importing Saudi oil, with the Kingdom classified as one of the largest suppliers of crude to the Chinese market, accounting for nearly 20% of China's annual oil imports. This mutual dependence has strengthened trust between the two sides and opened the door to extended partnerships in non-oil sectors.
Moreover, the Saudi government has launched massive initiatives under Vision 2030 to attract foreign capital, with Chinese companies emerging as one of the largest investors in Saudi infrastructure projects. Chinese firms have participated in executing projects such as NEOM City, the Red Sea Project, and the Jafurah gas complex, in addition to investments in railways and ports. These partnerships provide opportunities for technology transfer and expertise, contributing to the support of the local industrial sector, with the cement sector being a cornerstone of any infrastructure.
Financially, these relations are reflected in the flow of Chinese capital into the Saudi market, supporting stability in some vital sectors. Additionally, cooperation in energy and infrastructure enhances export opportunities for Saudi companies, opening up avenues for entering new markets through Chinese partnership channels. These data confirm that Saudi-Chinese relations transcend traditional trade boundaries, forming a strong lever for the growth of the Saudi economy and diversifying national income sources away from oil.
The Saudi Cement Sector: Features of a Huge Market and High Competition
The cement sector in Saudi Arabia is one of the largest industrial sectors, playing a central role in supporting infrastructure projects and real estate development. The sector includes more than 15 major and medium-sized companies, with their factories spread across various regions of the Kingdom to meet the increasing local demand. The importance of cement lies in its status as the essential material in all construction and building operations, making it a sensitive indicator of economic and urban activity levels.
In recent years, the sector has witnessed notable fluctuations in production and sales levels. In 2024, cement sales in Saudi Arabia recorded an annual growth rate of 3.7%, reaching 51.2 million tons according to Global Cement data. This growth comes against the backdrop of strong demand from housing and infrastructure projects, especially with the launch of major projects such as NEOM and the Red Sea Project, which require massive quantities of building materials. It is noted that 96% of cement sales during the fourth quarter of 2024 were directed to the local market, while exports did not exceed 4% of total sales.
On the other hand, the sector suffers from challenges of excess production capacity, as the current capacity of cement companies exceeds actual market needs at certain times, leading to fierce competition and pressure on profit margins. The Saudi Competition Authority imposed hefty fines on 14 companies in 2023 due to price-fixing practices, reflecting the intensity of competition and the regulatory bodies' oversight of the market. Cement companies are also looking to enhance their operational efficiency through expansion or through merger deals such as the acquisition of Hail by Qassim, to strengthen their market share and ensure their competitiveness in the future.
The Impact of Chinese Investments on the Saudi Cement Sector
Chinese investments play a growing role in shaping the features of the Saudi cement sector, especially in light of the strategic partnerships between the two countries. Major Chinese companies such as Sinoma have entered into the implementation of cement plant projects across the Kingdom, in addition to the advisory and technical roles these companies provide. This Chinese presence in the sector is reflected through several axes, most notably technology transfer and providing advanced engineering solutions that contribute to reducing production costs and increasing operational efficiency.
On the other hand, the demand generated by major projects executed by Chinese companies in the Kingdom serves as a catalyst for the growth of local cement companies' sales. For instance, projects like NEOM and the Red Sea Project, among others, which involve Chinese contracting companies, primarily rely on local supplies of cement and clinker. This overlap in supply chains enhances opportunities for Saudi companies and grants them a larger share in supply contracts for such mega projects.
Additionally, Saudi-Chinese cooperation in energy and gas sectors, such as signing agreements with Aramco and the Jafurah project in 2025, opens the door to indirect opportunities for Saudi building materials companies. The expansion of energy infrastructure necessitates the development of massive facilities, leading to increased demand for cement. In this context, Saudi companies benefit from a stimulating investment environment and from Chinese capital flows that enhance the sector's dynamism, despite the absence of direct partnerships with all cement companies so far.
Analysis of Cement Production and Sales Data in Saudi Arabia (2024–2025)
The Saudi cement sector witnessed significant growth in production and sales indicators by the end of 2024, driven by strong local demand. According to Global Cement data, cement sales increased by 12% year-on-year in the fourth quarter of 2024, reaching 14.87 million tons. This performance reflects a clear recovery in construction activity, with the ongoing implementation of mega infrastructure projects across various regions of the Kingdom. For the full year 2024, Saudi cement sales reached 51.2 million tons, an increase of 3.7% compared to 2023, confirming the upward trend of the sector.
In terms of industrial production, clinker production—the main component of cement—recorded a growth rate of 7% in the fourth quarter of 2024, reaching 14.9 million tons. These figures confirm the ability of Saudi companies to meet the increasing local demand, in addition to having a surplus that can be directed for export in case of rising external demand. Although exports constituted only 4% of total sales in 2024, some companies like Saudi Cement topped the list of exporters with a volume of 0.49 million tons during the fourth quarter, achieving a growth rate of 71% compared to the previous year.
These indicators reflect a balance between massive production capacity and growing local demand, with opportunities to increase exports if external markets improve. They also highlight the importance of operational efficiency and cost control, especially with ongoing local competition and the presence of excess production capacity. The sector remains contingent on the extent to which the momentum of national infrastructure projects continues and the stability of energy policies and fuel prices, which represent a critical element in the cost structure for Saudi cement companies.
The Qassim Acquisition of Hail Cement: Motivations and Impacts
In June 2024, Qassim Cement Company announced the completion of its full acquisition of Hail Cement Company for a value of $378 million (approximately 1.42 billion Saudi Riyals), in a strategic move aimed at strengthening its position in the Saudi cement market. This acquisition followed a memorandum of understanding signed the previous year, resulting in Hail officially merging into Qassim's operations, making the latter the second-largest cement company in terms of market share at around 11%.
The main motivations behind this acquisition stem from Qassim's desire to expand its geographical operations and enhance its competitiveness, especially in light of excess production capacity in the sector. The acquisition allowed Qassim to benefit from Hail's productive assets, expand its customer base in northern and central Saudi Arabia, and improve operational efficiency through operational integration and reducing fixed costs. The merger also provides greater flexibility in facing market pressures resulting from intense local competition and excess supply.
On the other hand, the deal represents a fair market value for Hail, especially given its limited profits and high price-to-earnings (P/E) ratio due to weak net profits. It is noted that Hail had been reinvesting its profits to improve operational efficiency rather than distributing them to shareholders, which resulted in a low distribution yield compared to some of its competitors. After the acquisition, Hail's operations are expected to benefit from Qassim's financial and administrative capabilities, contributing to the overall efficiency of the group, with the potential to improve its share of the Saudi cement market in the face of future challenges.
Financial Performance of Hail Cement Before the Acquisition
Before the completion of Qassim Cement's acquisition of Hail in mid-2024, Hail Cement was a medium-sized company primarily operating in the Hail region, focusing on meeting local demand in northern Saudi Arabia. According to announced financial data, Hail's net profits reached approximately $6.5 million in the first half of 2023, while its profits for the first nine months were estimated at around $5.7 million, reflecting a decline from previous profitability levels. This directly affected the company's market valuation, as its price-to-earnings (P/E) ratio became high due to the decline in net profits compared to an estimated market value of around 1.4 billion Riyals.
Regarding cash distributions, Hail did not announce significant distributions in recent years, as the company's management preferred to reinvest profits in expanding production capacity and improving operational efficiency. This approach reflects the company's attempt to enhance its ability to face fierce competition in a saturated market with excess production, but it also led to a low distribution yield for shareholders compared to other companies in the sector.
In terms of operational performance, Hail recorded a noticeable decline in sales during the last months of 2023, affected by decreased local demand and increased competition intensity. However, the company maintained its market presence by focusing on quality and improving production lines. It is expected that its merger with Qassim will contribute to improving its financial results in the future by benefiting from economies of scale and reducing administrative and operational costs.
Competition Analysis in the Saudi Cement Sector and Key Players
The Saudi cement sector is characterized by a diversity of competing companies and their geographical distribution, with major companies dominating significant market shares, alongside medium and small companies covering specific regions. Among the prominent companies is Al-Yamamah Cement Company (3010), which leads the market share with about 13% in the fourth quarter of 2024, followed by Qassim Cement Company (3008) after its acquisition of Hail, with a share of about 11%. In addition to these two companies, there are other leading companies such as Saudi Cement, which excels in the export sector with an 80% share of total exports during the same period.
The list of competitors also includes companies such as Tehama, Southern Cement, City Cement, Eastern Cement, Riyadh Cement, Tabuk Cement, and Qena Cement, in addition to medium-sized companies like Umm Al-Qura and Najran. These companies cover all regions of the Kingdom, from north to south and from east to west, ensuring product availability and a variety of options for buyers.
Competition in the sector relies on several factors, including production efficiency, energy costs, product quality, distribution networks, and the ability to respond quickly to the needs of major projects. The recurrence of merger operations, such as the merger between Qassim and Hail, reflects a trend towards enhancing economies of scale and reducing costs to face the challenges of excess production. On the other hand, regulatory authorities impose strict oversight on competition practices, and the sector has seen fines of 140 million Riyals imposed on 14 companies in 2023 due to price-fixing, confirming the delicate balance between enhancing efficiency and ensuring fair competition in the market.
The Role of Mega National Projects in Boosting Cement Demand
Mega infrastructure projects such as NEOM, the Red Sea Project, and the Jafurah gas project are among the key drivers of cement demand in Saudi Arabia in recent years. These projects represent a central part of Vision 2030, aiming to transform the Kingdom into a global economic and tourism hub, which requires massive investments in construction and infrastructure. Specialized sources have estimated that annual cement demand in the Kingdom could reach 78 million tons over the next five years to meet the needs of current and future projects.
Major Chinese companies are participating in executing parts of these projects, enhancing opportunities for local cement companies to supply their products due to geographical proximity and the ability to meet quality requirements and strict timelines. For instance, the NEOM project alone represents a giant smart city that requires millions of tons of cement and clinker to complete its infrastructure, including roads, buildings, and industrial facilities.
This increasing demand provides significant opportunities for Saudi cement companies, especially those with high production capacities and strong distribution networks. However, capitalizing on these opportunities requires precise execution plans and continuous investments in modernizing factories and improving operational efficiency. Any delays in implementing national projects or changes in investment policies could negatively impact demand levels, necessitating companies to maintain strategic flexibility and adaptability to market changes.
Regulation and Oversight in the Cement Sector: Protecting Competition and Enhancing Transparency
The Saudi cement sector is subject to close supervision by regulatory authorities, particularly the Saudi Competition Authority and the National Cement Committee, aimed at ensuring a fair and transparent competitive environment. In April 2023, the Competition Authority imposed fines of 140 million Riyals (about $37 million) on 14 cement companies, including Hail, due to collusion in price-fixing, in a move aimed at curbing monopolistic practices and ensuring the protection of consumer and national project interests.
These measures coincided with ongoing efforts by the National Cement Committee to monitor market conditions and provide the government with advice on new regulatory measures. Committee officials have indicated expectations for a gradual recovery in cement demand starting from late 2024 to early 2025, due to the acceleration of spending on mega projects. In contrast, some major companies are seeking to resort to mergers and acquisitions, as seen between Qassim and Hail, to reduce internal competition and achieve economies of scale.
From a legislative perspective, regulatory authorities impose strict rules on financial disclosure, product pricing control, and monitoring production quality. Companies listed in the Saudi financial market are required to comply with governance standards and periodically disclose financial data. This strict regulatory environment aims to enhance investor confidence and ensure the financial sustainability of the sector, while encouraging companies to innovate and improve operational performance to keep pace with changing market demands.
Trends in Mergers and Acquisitions in the Cement Sector
The Saudi cement sector has witnessed an increasing trend towards mergers and acquisitions in recent years as a strategy to address challenges of excess production capacity and enhance operational efficiency. The merger of Hail with Qassim in June 2024 stands as a prime example of this trend, enabling the two companies to expand their operational scope and achieve economies of scale in production, distribution, and management.
This trend is not limited to these two companies alone; other companies such as Madinah and Umm Al-Qura have announced their intention to enter into future merger deals, aiming to reduce internal competition and improve the balance between supply and demand. Mergers help reduce fixed costs, increase companies' flexibility in dealing with demand fluctuations and fuel prices, and enhance their ability to secure supply contracts for major projects requiring large quantities of cement.
On the other hand, regulatory authorities encourage these moves, provided they comply with competition laws and do not harm consumers. Well-considered mergers can lead to a more stable and profitable sector, granting companies greater capacity to invest in innovation and product development. However, the results of these operations should be closely monitored to ensure that the desired objectives are achieved without creating monopolistic entities that harm market balance or unjustifiably raise prices.
The Impact of Saudi-Chinese Relations on the Saudi Stock Market
The strong economic relations between Saudi Arabia and China play a pivotal role in enhancing the performance of the Saudi stock market, especially for companies operating in the energy, infrastructure, and construction materials sectors such as cement. For instance, any new agreements for oil exports to China increase the revenues of Saudi energy companies, positively reflecting on market indicators and providing additional confidence to local and international investors.
Moreover, direct Chinese investment in Saudi infrastructure projects raises the demand for products from contracting and building materials companies, including cement and clinker. This increasing demand provides opportunities for listed companies in the Tadawul to achieve sustainable revenue growth, making the sector more attractive to capital seeking investment opportunities in a stable economic environment.
As Saudi-Chinese partnerships in energy and gas expand during 2025, it is expected that the circle of beneficiaries from these relations will include new sectors, enhancing the dynamism of the Saudi financial market. However, investors still need to conduct in-depth analyses of financial data and monitor regulatory developments to ensure that decisions are based on realistic data rather than unstudied forecasts.
Challenges and Future Opportunities in the Saudi Cement Sector
Despite the significant opportunities provided by the increasing demand for cement due to national mega projects and international partnerships, the sector faces major challenges that require strategic solutions. Among the most prominent challenges is excess production capacity, where the current capacity of companies exceeds local demand at certain times, leading to price pressures and profit margin squeezes. Additionally, fierce competition among companies and strict regulatory oversight impose a high level of commitment to transparency and quality standards.
On the other hand, significant growth opportunities arise from leveraging major infrastructure projects and expanding exports to regional and global markets if economic conditions improve. Furthermore, mergers and acquisitions provide companies with competitive advantages in terms of cost reduction and operational efficiency. The importance of technological innovation and the use of renewable energy in enhancing the sustainability of the sector is expected to increase, especially as the Kingdom moves towards a green economy.
It is essential for companies to remain vigilant to market changes, invest in developing their human and technical capabilities, and adopt flexible strategies capable of adapting to regional and global economic transformations. Additionally, enhancing cooperation with international partners, especially China, can contribute to knowledge transfer and localizing modern technologies used in the cement industry.
Recent Developments and News in the Saudi Cement Sector
The Saudi cement sector has witnessed a series of significant developments during 2024 and 2025, the most notable of which was the completion of Qassim's acquisition of Hail Cement in June 2024 for $378 million. This deal crowned a growing trend towards mergers among major companies to strengthen their position in a highly competitive market with excess production capacity. Other companies such as Madinah and Umm Al-Qura have also announced their intention to enter into similar deals in the near future.
On the sales front, statistics for the fourth quarter of 2024 showed a 12% increase in cement sales, indicating a recovery in construction activities, driven by the accelerated pace of mega projects under Vision 2030. Exports also recorded significant growth, especially thanks to the performance of Saudi Cement Company, which accounted for 80% of total export shipments.
On the other hand, regulatory authorities continued to impose strict oversight on the sector, with 14 companies fined in 2023 for price-fixing practices. Meanwhile, officials from the National Cement Committee indicated that cement demand may witness a gradual recovery from late 2024 to early 2025, thanks to continued government spending on mega projects. These developments enhance the sector's dynamism and highlight the importance of rapid responsiveness to market changes, whether through mergers, improving efficiency, or diversifying revenue channels.
Conclusion
In light of the data and analyses presented, it is clear that the economic relations between Saudi Arabia and China represent a fundamental pillar for supporting the Saudi cement sector and providing a stimulating investment environment for sustainable growth. The strategic cooperation between the two countries has facilitated new capital flows and contributed to stimulating local demand through major projects that form the backbone of Vision 2030. Conversely, the sector faces challenges of overproduction, competitive pressures, and regulatory oversight, prompting companies to adopt merger strategies and continuous development to ensure survival and excellence in a changing market.
It is important to emphasize that the success of companies in capitalizing on these opportunities depends on their ability to innovate, improve operational efficiency, and adopt best global practices. Investors and those interested in the cement sector or Saudi stocks in general should carefully analyze financial data and consult a licensed financial advisor before making any investment decisions. Transparency, adherence to laws, and strategic flexibility remain vital elements to ensure sustainability and progress in a vital sector like cement amidst deepening Saudi-Chinese relations.
Frequently Asked Questions
The economic relations between Saudi Arabia and China are characterized by a comprehensive strategic partnership spanning energy, trade, and investment sectors. China imports over 20% of its oil needs from Saudi Arabia, making the Kingdom one of the largest oil suppliers to China. Additionally, Chinese companies invest in major Saudi infrastructure projects and participate in executing projects like NEOM and the Red Sea Project, as part of Vision 2030. This cooperation extends beyond trade to include technology transfer and knowledge exchange, enhancing economic growth opportunities for both countries.
Chinese investments play a pivotal role in supporting the Saudi cement sector indirectly, through Chinese contracting companies executing massive projects that require large quantities of local cement. Chinese companies have also entered into partnerships to build new factories and develop production lines, contributing to technology transfer and operational efficiency improvement. This interaction between Chinese and Saudi companies provides opportunities to expand the local market and helps Saudi cement companies benefit from the increasing demand associated with major projects.
The acquisition of Hail Cement by Qassim aimed to enhance market share and expand geographical operations, especially in northern and central Saudi Arabia. The merger allowed both companies to achieve economies of scale, reduce fixed costs, and improve operational efficiency amid intense competition and excess production capacity in the sector. The merger also enabled Qassim to benefit from Hail's assets and customer base, enhancing its ability to secure supply contracts for major national projects requiring large quantities of cement.
The sector faces multiple challenges, the most prominent of which is excess production capacity, which leads to fierce competition and pressures on prices and profit margins. Regulatory authorities impose strict oversight on pricing practices and product quality, and significant fines have recently been imposed on some companies for price-fixing. Additionally, the sector requires continuous investments in developing factories and improving efficiency to meet the increasing demand from major national projects, while adapting to changes in energy prices and economic policies.
The NEOM and Red Sea Project are among the largest national projects launched by Saudi Arabia under Vision 2030, requiring millions of tons of cement and clinker to complete infrastructure, facilities, and roads. These projects represent a major driver of growth in local cement demand and attract global contracting companies (including Chinese) that rely on local supplies. Consequently, Saudi cement companies benefit from increased demand and higher sales volumes, provided they can meet the specifications and timelines of the projects.
The Saudi cement market includes several major companies such as Al-Yamamah Cement Company (3010), which leads the market with a 13% share, and Qassim Cement Company (3008), which strengthened its position after merging with Hail. There is also Saudi Cement, which leads in exports, along with companies like Tehama, City Cement, Eastern Cement, Riyadh Cement, and Tabuk Cement, among others. These companies compete based on production efficiency, product quality, distribution capability, and meeting the requirements of major national projects.
Excess production capacity leads to increased competition among companies, as each company seeks to maintain its market share by lowering prices or offering promotional deals. This situation pressures profit margins and forces companies to improve operational efficiency or seek new export markets. In some cases, excess production drives companies to merge or acquire to achieve economies of scale and reduce fixed costs, as seen in the Qassim-Hail deal.
Cash distribution policies vary among Saudi cement companies based on their financial results and expansion strategies. Some major companies distribute a significant portion of their profits to shareholders annually, while others, like Hail previously, prefer to reinvest profits in developing factories and increasing production capacity. The distribution decision also depends on market demand levels, net profit sizes, and the company's commitments to its future projects.
Regulatory bodies such as the Saudi Competition Authority play an important role in regulating the cement market by monitoring pricing practices and preventing monopolistic or collusive behavior among companies. The authority has recently imposed significant fines on companies that violated competition laws, prompting companies to review their marketing strategies and product pricing. Regulatory authorities also impose strict standards on production quality and financial disclosure to enhance transparency, protect consumers, and achieve sustainability in the sector.
News about the cement sector and listed companies can be followed through the official website of the Saudi Tadawul market, which publishes financial data and official disclosures from companies. Economic news websites such as Argaam, Al Arabiya, and Global Cement provide periodic updates on sector performance, major deals, and company results. Additionally, regulatory authorities publish annual reports on market conditions, and it is always advisable to review official sources or the companies' own websites to ensure information accuracy.
So far, Saudi cement companies have not announced direct partnerships with Chinese companies in ownership or management of factories. However, major Chinese companies participate as contractors or technology providers in building and developing cement plants within the Kingdom. Chinese companies also provide technological solutions and technical consulting that contribute to improving production efficiency. Direct cooperation may expand in the future as Saudi-Chinese relations deepen, especially given the ongoing need for technology transfer and sector development.