Last Update: 15/02/2012 09:22:59
The recent acceleration of government-funded construction projects in Saudi Arabia has given a significant boost to end-user steel consumption, and led to an increase in output at many of the kingdom’s long product re-rollers. Because of the gap between domestic billet and finished product capacity, rolling mills resorted to importing more billet from Turkey in January. Construction activity funded by the government’s $130bn plan, announced last year, is starting to gather pace and expected to help maintain healthy steel demand until at least 2015. “Government spending increases overall economic confidence and encourages private sector investors to enter the Saudi market with steel-consuming construction projects,” an executive at a major mill tells Steel Business Briefing. “We expect a host of new projects in the near future, on top of the ones getting underway now – the outlook for steel demand is healthy,” he adds. The Saudi steel sector is unable to cope with the burgeoning demand for long products in its present state, as re-rolling capacity exceeds billet capacity. There are three major domestic steelmakers: state-owned SABIC, Al Tuwairqi and Rajhi Steel, which have a combined capacity of 7m tonnes/year of crude steel, around 5m t/y of which is billet. Long product rolling capacity, however, stands at approximately 8m t/y. When demand for longs picked up last month therefore, re-rollers imported 205,508t of billet from Turkey, up sharply from 50,728t in December. A multitude of new meltshops are expected to come on line in the next four years: Arkan Steel, South Steel and Rajhi Steel’s facilities, all with a capacity of 1m t/y, as well as Rajhi Heavy Industries’ 2m t/y plant at the group’s new site north of Jeddah. However, all of these investments will also include rolling mills, thus doing nothing to close the billet deficit in Saudi Arabia. The most recent billet imports were from Ukraine at $620/tonne CFR Jeddah.
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