The Saudi Basic Industries Corporation reiterated its commitment to enforcing the long steel products prices announced since the beginning of March 2010. SABIC keeps tracking adherece to these prices to make sure that all distributors are comitted to the official rates at all points of sale in different cities of the kingdom. SABIC praises the role of the Ministry of Commerce and Industry in controlling sales traffice at warehouses, inventory levels, prices to ensure that they are applied in conformity with the price levels announced on Ministry’s website.
SABIC has assured that it spare no effort to maintain the stability and balance of the Saudi steel market. SABIC works hard to meet the requirements of this market. This is demonstrated in escalating the production by 10 percent over last year, which is the highest-ever production level achieved by Hadeed. Likewise, sales increased by 16 percent over the approved plan. SABIC is keen to ship all the quantities produced with full commitment to sell all long products quantities in the local market and to totally stop expors since the end of the 1Q2008. This is coupled with proceeding with an expansion project which aims to raise annual capacity of long products to reach four million tons by mid-2012, compared with the existing capacity of 3,2 million ton.
SABIC has made it clear that the prices of reinforcing steel are the best and fair in the Saudi and GCC markets, despite the hiking prices due to global rise in the cost of major manufacturing components, including iron ore, steel blocks and scrap. SABIC noted that these components constitute 70 to 90 percent of the total costs in the steel plants depending upon the processes and technologies of each plant. Other components such as electricity and gas represent the remaining percentage.
SABIC has calrified that the iron ore prices have risen globally by 60 percent beginning of March, which is SR 400 extra cost in the price per ton of reinforcing steel. The rise iron ore price was accompanied with similar rise in the prices of imported steel blocks by 40 percent beginning of this year and was accompanied by high scrap prices.
In comparison to the global steel prices, SABIC pointed out that the price per ton of Turkish iron, which is the major source for the countries of the region, is now SR 2,400 C&f the ports of the GCC before adding the costs of clearance, unloading, transportation and profit margin. Some neighboring Gulf Arab countries suffer some weaker demand in markets unlike Saudi Arabia markets. This has deffered the consequential impact on the plants and markets in these countries let alone the steady incremental costs resulting from global conditions. The estimated price per ton of steel in the United Arab Emirates is SR 2,220, in Qatar SR 2,214 and in Oman, Bahrain and Kuwait the prices are comparable to the prices in the Kingdom of Saudi Arabia at SR 2,200) per ton.
The demand in the Saudi market is expected to rise this year by 8 percent bringing the consumption to nearly 6.4 million ton, with total production capacity of the local plants about 7.3 million tons when these pants are running at full capacity. It should taken into account that the proportion of production that is dependent on the import of steel blocks for production of long steel products accounts for about 30 percent of the total capacities and currently cannot be imported from foreign markets due to the high cost compared to the prices of finished products in the Kingdom.