Saudi Arabia’s construction sector has been hit by rumors that steel prices will collapse shortly because of falling demand, but its industry chief insisted that prices showed only slight decline, newspapers said on Thursday.
“There are rumors that steel prices will soon collapse, but they are not true,” Shuail Al Ayed, Chairman of Steel Committee in the Council of Saudi Chambers of Commerce and Industry, told Alriyadh, a Saudi Arabic language daily.
He added that steel bar prices fell by around $26.6 (SAR100) per tonne in December, but added that steel foils dipped to $412 (SAR1,845) from $573 (SAR2,150).
“The big price decline happened only in steel foils. Prices for other steel products fell by only around 100 riyals per tonne for marketing reasons,” he said.
They include an increase in stocks, the departure of illegal migrant workers, and seasonal year-end drop in demand as contractors await disbursal of payments from the government.
Ayed expects demand for steel in Saudi to rebound in the next few months following statements by the finance minister that fall in oil prices will not affect capital spending.
On Thursday, Arabic language newspaper Okaz quoted ‘informed’ industry sources as saying that some steel manufacturers are trying to sell their stocks before prices plunged.
“Some steel companies in the Kingdom have sent confidential letters to their agents in Jeddah and other major cities [asking] not to stock any steel products and to quickly sell existing stocks to avert an expected decline in prices,” it said.
Sources added steel prices could shortly tumble by $133-213 (SAR500-800) per tonne due to a sharp fall in crude oil prices.
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