Saudi Arabia’s production of steel slumped by a massive 200,000 tonnes to 800,000 tonnes from one million tonnes as manufacturers call for restrictions on steel exports to be eased.
An industry source said that producers decided to slash production from one million tonnes to 800,000 and that has led to lower inventories.
Factories hold about 800,000 tonnes of steel surplus while traders have 400,000 tonnes, bringing the total available steel in the Kingdom to 1.2m tonnes, says the chairman of the National Committee for Steel Industry at the Council of Saudi Chambers, Shuail Al Ayed.
In remarks published by Al Eqtisadiah, Al Ayed says that manufacturers will not be able to increase output as long as steel exports are not allowed.
He notes that local consumption of rebar stands at 10m tonnes a year and at 850,000 tonnes a month, indicating that raising inventories would result in heavy financial costs to manufacturers.
The fierce market competition has sent steel prices tumbling from SAR2,800 per tonne to SAR2,300 per tonne now, Al Ayed notes, adding that prices have reached a minimum and can’t be allowed to go down further as that will mean manufacturers incurring a loss.
(SAR1 = $0.26, at the time of publishing)