KSA steel problems put down to exports

Chairman of Saudi Iron and Steel Company urges national manufacturers to stop exporting steel to meet Saudi needs

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By  Rhys Jones Published  April 3, 2004

Steel manufacturers in Saudi Arabia are being urged to stop exporting steel in order to meet domestic needs. The call comes from Muhammad Saleh Al Jabr, the chairman of Saudi Iron and Steel Company (Hadeed), which is an affiliate of Sabic. Of the four million tonnes of steel produced annually by Saudi Arabia, three million tonnes are produced by Hadeed with the remaining one million supplied by four other steel factories in the private sector. Al Jabr claims that 90% of Hadeed production goes to the local market and the rest goes to the GCC and international market. However, Al Jabr has had to move to deny media reports that Hadeed exports steel to Iraq and the US. “Hadeed has not exported steel to Iraq for 15 years,” said Al Jabr. “The present steel shortage is a global phenomenon and the situation is unlikely to improve for the next two years,” he added. Al Jabr said Hadeed in co-operation with other private sector steel industries had commissioned a study into ways of solving the nation’s steel problem. In spite of Saudi’s own crisis, world consumption has increased according to Al Jabr. “China alone consumes 28% of the global steel production,” he said. “The US has now had to open the doors for imports and as a result many large steel manufacturers are selling their products to the US,” he added. Russia and Ukraine have both sold their steel products in the international market in the past but have recently stopped exports in order to meet their own domestic demand, which also contributed to the international shortfall. International demand has shot up by 19% in the last month primarily due to large construction projects and also because of hikes in shipping rates and the high cost of raw materials. In Saudi Arabia, the steel price is about US $80/tonne, which is lower than the international price and thus, domestic steel demand is continuously increasing. In response, Hadeed is launching a new production facility with initial production of 500 tonnes annually, which should ease the pressure a little. However, the best way to meet the shortage was to stop export, said Al Jabr.

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