RATIONAL

The Building Materials industry has a unique opportunity to leverage KSA’s dynamism in the coming years, and thus grow its scale both domestically and regionally to bring increased economic benefit to the Kingdom. First, the large megaprojects under development mean there is significant potential in both the domestic and regional construction markets, which provide the opportunity to export to the MENA region. Second, the capabilities built by the Kingdom can make KSA a regional leader in the construction and building materials industries. Third, the integration of advanced construction methods will lead to the development of trained and skilled workers who add unique, high value to products. Finally, the Building Materials industry is imperative to shift the focus toward the circular economy and energy-efficient designs that reduce reliance on fuel.

Value Proposition

• The global construction market is growing, with a value of USD 4,663 bn in 2020 that is expected to reach USD 8,490 bn by 2030, growing 5% per year.

• The KSA Construction Market is growing at a CAGR of 5% (2019-2030) and is estimated to reach a value of SAR 280 bn by 2030.

• Availability of raw materials.

• Competitive access to energy resources.

• Cement is local market by nature with China as the biggest producer and exporter of , with a total capacity of ~1.8B tons and exports of ~$4B in 2019.

• Ceramic tiles is the segment with highest global demand, requiring strong design capabilities.

• Packaging glass is the segment with highest global production accounting for 45% of all global glass production.

• Stone is a globally traded market, highly fragmented in nature with a few large players.

• With a high relative transportation cost, cement is a local market by natured exports of ~$4B in 2019.

• The industry is characterized by national and multi-national consolidation in search for economies of scale.

• Global trend towards energy efficiency and CO2 reduction has led manufacturers to diversify fuel mix, reduce clinker factor and minimize plant energy consumption.

Ceramic tiles:

• Wall and floor tiles is the segment with highest global demand.

Sanitary ware:

• The sanitary ware market is mostly brand-driven.

• Leading market players have been investing in Industry 4.0 applications to automate the manufacturing process for sanitary ware.

Clay pipes:

• The clay pipes market is typically local in nature due to high transportation costs and ease of production.

• Stone is a globally traded market, highly fragmented in nature with a few large players.

• Usage of stone is mainly defined by architects and designers, making it subject to competition with other building materials (e.g., ceramics).

• China is both the top importer (~$2.5B in 2019) and exporter (~$ 2.4B in 2019) of stone globally.

• Stone-manufacturing companies have been investing in industry 4.0 technologies to adopt automation for energy-efficiency purposes.

Float glass:

• The float glass market is a regional one, mainly due to high transportation costs.

Packaging glass:

• Packaging glass is the segment with highest global production accounting for 45% of all global glass production.

Glass fibers:

• The competitive landscape for glass fibers is highly concentrated (top 5 players account for ~69% of production).

•Quality, cost, innovation and speed of delivery are major competitiveness factors.

• Turkey is the top exporter of cement, 83% of which is clinker and powder cement, with USA as a significant market (17% of total).

• Turkey is leader in ceramic design education with courses given in over 54 different faculties and schools across the country.

• Packaging glass is the segment with highest regional production, and makes up majority of exports.

• Turkey is the top of exporter of Marble (~$1.78B), whereas the UAE is the top export- er of Limestone (~$247M).

• Kuwait is the top importer of cement (of which 34% is clinker and 38% is powder cement).

• 13% of Kuwait imports originate from KSA.

• 90% of Jordan imports originate from KSA.

• Turkey is the top exporter of cement (50% of which is clinker), with the United States as main export market.

• The majority of KSA exports in cement consist of clinker.

• KSA is the top importer of ceramics (67% of which is floor tiles).

• India, China and Spain are major sources of import regionally.

Turkey is the top regional exporter of ceramics (62% of which is floor tiles), with Germany, USA and the UK as main export markets.

• Turkey is the top importer of glass, 31% of which is glass fibers (including glass wool).

• China is the top source of imports across the top 5 regional countries.

• Turkey is the top exporter of glass (of which 28% is packaging glass, and 19% tempered/laminated glass).

• For KSA, packaging glass consists of 20% of all exports.

• Kuwait is the top importer of stone.

• 90% of imports in KSA consist of Marble.

• The UAE is the top exporter of stone, of which 85% is Limestone.

• The Kingdom has very minimal exports of stone.

• The cluster builds on the sizeable KSA construction market that is expected to return to a growth path, with multiple mega projects in the pipeline.