Posted on 01 Feb 2023
Saudi Arabia's largest steel producer and market maker, Hadeed, has gone against the prevailing trend by reducing February-rolling finished long product prices by SAR 150/tonne ($40) on January quotes.
Sector participants were not expecting the price reduction, which has made longs importers concerned about their previously booked imports to be delivered from February onwards, Kallanish observes.
Hadeed, perceived as the sole tier-one mill in the kingdom, set its February-delivery 12-32mm diameter rebar price at SAR 2,500/tonne ($666), rebar in coils at SAR 2,600/t ($693) and 6.5mm+ diameter wire rod at SAR 2,650/t ($706). It levies a SAR 100/t ($26.6) extra for 5.5-6mm dia wire rod. Prices are on a 90 days credit basis and delivered across the country.
The company reduced its project discount on list prices to SAR 100/t from SAR 150/t, given to MoU-signed customers for quantities above certain quota limits – a so-called eligibility percentage. The eligibility percentage varies based on customer classification.
"Hadeed, with its new price strategy, is re-ensuring its presence and strengthening its position in the domestic market,” comments a source familiar with the situation. "The market designer [Hadeed] wants to show its competitiveness against the competitors in the domestic market and Gulf Cooperation Council who plan to export to Saudi Arabia."
Tier-two mills Rajhi and Al Ittefaq, as well as medium capacity mills Watania, Al Yamamah and Tilal; and tier-three mills Watani, Jazeera, Ajeej and others are expected to announce their rebar quotes in the coming days.
"The market is disturbed after the price reduction; traders are crying. No one expected this. Traders have large rebar stocks purchased mainly from Hadeed in January with higher average buying prices. Demand is not bad but also not very good,” comments a buy-side source.
Petrochemicals giant Sabic's wholly owned subsidiary Hadeed has an annual production capacity of 3.8 million tonnes of longs and 2mt of flats, and has five direct reduced iron modules with a yearly production capacity of 5.5mt. The company has renewed MoU contracts for 2023 with all its existing customers bar two. Negotiations are heard ongoing with the two customers and are expected to be finalised soon.
Source:Kallanish
