Jeddah- In light of increasing demand on iron ore, Saudi Arabia’s factories are in the process of reconsidering rates as market competitiveness grows, setting up local products versus imports.
Workers at the iron ore industry told Asharq Al-Awsat newspaper that imports represent a sizable competitor to the local supply of iron ore, especially that early annual rates for local product opened up at a $53 per ton. On the other hand, Turkey and Ukraine imported iron ore supplies experience continuously fluctuating rates.
As supply and demand affect market competitiveness, local industrialists might soon resort to lowering rates, leveling with those of imports.
Hassan Alzeneed, chair to Alzeneed local iron manufacture, considered that imported iron ore is considered highly competitive to the costly local product.
Demand on local iron ore decreases, consequentially resulting in an excess in supply at stocks of local giants such as Riyadh’s SABIC.
Iron ore market expert Hussein Al Sayed said that available stock at the Saudi market ranges between a bloated 7-10 million tons, 60 percent of which owned by SABIC, given that market demand is roughly 7 million tons.
Sayed confirmed that this is not the first time that the Saudi iron ore market experiences recession, sales experienced congestion throughout 2011-2013. He added that demand will go up as real estate projects
expand. Many residential city-scale compounds are underway across the Kingdom of Saudi Arabia.
The Saudi Standards, Metrology and Quality organization will soon be implementing a new set of regulatory quotas on imports, which is expected to cutback flow into markets opening up opportunity for local product, preserving economic equity.
Specialists believe that if local iron ore rates are lowered, it would be considered the second time that local manufacturers decide on clipping rates.
SABIC and other iron ore manufacturers had cut back rates earlier this year after Saudi construction experiencing recession– rates on rebar, otherwise known as reinforcement steel, went from an $800 rate to $560 which is a 30 percent cutback.