Posted on 01 Sep 2020
Saudi Iron & Steel Company (Hadeed) has increased its rebar and wire rod prices for the domestic market by SAR 100/tonne ($27). Local market participants tell Kallanish the move is mainly cost driven as demand has not improved significantly.
Rebar of 16-32mm diameter is now quoted at SAR 2,300/t ($613), while 12-14mm dia rebar is pegged at SAR 2,350/t. Wire rod of 5.5-6mm dia is at SAR 2,075/t and 6.5-16mm dia rod is at SAR 2,050/t. All prices are delivered nationwide.
The hike is the result of higher iron ore and scrap prices, as well as rising international steel prices. “It’s surely cost related,” says one Saudi mill source of the move. “Demand was becoming weaker by the end of August.” A local trader, meanwhile, observes: “Demand is still weak.”
However, another mill source explains the move “…reflects demand improvement after a business recovery from Covid-19 as well as an increase in cost, mainly from iron ore and scrap.”
Some sources say certain Saudi mills are also experiencing shortages in scrap supply, putting further upward pressure on steel prices. Local scrap generation has been hampered by the decline in mega project spending and stringent labour regulations that have reduced labour available for scrap collection, a Saudi source notes. Moreover, the second-quarter Covid-19 lockdown also hit scrap supply. Not all Saudi mini-mills have the financial clout to import scrap to fill the gap.
In the first half of 2020 Hadeed saw revenue fall -23% on-year to SAR 4.5 billion ($1.2 billion) and net loss deepen over six-fold to SAR 795.9 million (see Kallanish passim). Hadeed reduced its rebar price in May to discourage imports from United Arab Emirates and Oman, where prices were lower than in Saudi.
Source:Kallanish
