Saudi Arabian scrap suppliers and merchant billet producers are preparing to raise prices on the back of diesel and heavy fuel oil (HFO) price hikes in the kingdom, Kallanish notes.

Diesel has increased 53% to SAR 1.15/litre ($0.31), from SAR 0.75/litre, while HFO has risen 75% to SAR 0.35/litre from SAR 0.20/litre.

"The diesel price hike will have an impact of SAR 5-10/t on transportation cost of billet, while HFO will add SAR 20-25/t to billet production costs," says a senior official at a local billet mill. "Onwards next Sunday, the price increase on energy will be reflected in scrap and billet quotes."

The benchmark mill maintained for January purchases its December scrap purchase prices of SAR 1,120/t ($299/t) for light scrap, SAR 1,600/t ($427/t) for HMS 80:20 grade, SAR 1,645/t ($439/t) for shredded and SAR 1,670/t ($445/t) for premium, all on a delivered basis with weekly payment.

Local scrap demand is high, and merchant billet producers in Riyadh and Dammam are paying SAR 1,550-1,570/t delivered for HMS 80:20 grade.

Ex-mill prices for rebar grade (4sp) billet are at SAR 1,980/t in Jeddah and SAR 2,010-2,025/t in Riyadh and Dammam. From the coming Sunday, mills are expected to revise their quotes upon the cost increase.

The country's largest merchant billet producer, Al Qaryan, ended 2023 with 147,000 tonnes of billet exports, comprising 42% of its production. The company is expanding, with ABB contracted to supply another induction furnace, which will increase annual billet production capacity by a further 150,000 tonnes from the current 350,000 t/year. The unit is expected to start commercial production in June 2024, senior company official Usama Fouad tells Kallanish.

"We have been very active in the United Arab Emirates, Bahrain, Jordan and Kuwait markets, particularly in the first half of 2023. We will continue to exploit export opportunities in our traditional export markets and overseas in 2024," he adds.