Iron prices in Saudi local markets are expected to go up in the coming months following the recovery of the construction sector market, which had been hit by acute labor shortage.
Authorized dealers of iron products produced by Saudi Basic Industries Corporation (SABIC), Al-Rajhi and Al-Itifaq told local media that the current price had stabilized at SR2,700 per ton.
However, the remarkable improvement in demand will push up the price, which is expected to touch SR3,000 per ton that was prevalent in the market before the acute labor shortage hit the construction sector, Asharq Al-Awsat daily said quoting the dealers.
Hasan Al-Zenaid, an investor in iron, said the Saudi market had witnessed a drop in demand for rebar iron due to partial suspension of activity in the construction sector following labor shortage coupled with the entry of imported iron, at the expense of national product, which was sold at SR2,250 per ton. Eighty percent of applications for iron products are from government projects, he said.
He added that the market can absorb additional production from new iron plants, which will also create competition in prices, particularly in the case of imported iron.
Head of the contractor committee at Jeddah Chamber of Commerce and Industry (JCCI) Abdullah Rudwan said the iron market went through a stagnant period following the correction campaign of foreign workers. By the beginning of the current year, demand for iron had gone up with projects getting back into steam.
Experts said the demand for iron had gone up by 10 percent and the uptrend was expected to continue with government spending and housing projects picking up. With the demand for iron estimated at seven million tons and national production touching five million tons, there is a shortfall of two million tons in the market, they said.
It may be recalled that total production of rebar iron in the Kingdom stands at 4.7 million tons of which SABIC’s share is 2.8 million tons, or 59.57 percent, followed by Al-Itifaq at 1.3 million tons, Al-Rajhi and Yamamah at 500,000 tons for each, while Al-Mikairish and Al-Jawhara are producing 300,000 tons and 100,000 tons respectively, the report said.