Demand for rebar is growing in Saudi Arabia; however, steelmaking raw materials, in particular scrap and semis, are in scarce supply.

Jassim Abbas, sales, marketing and business development general manager at Saudi’s second-largest steelmaker, Al Ittefaq Steel, notes the growth in rebar demand has become more evident in November. The steelmaker representative was speaking during a Q&A session at the Saudi Industrial Development Fund (SIDF)'s steel workshop in Riyadh on Sunday, at which Kallanish gave a detailed presentation on the Middle East and global steel markets.

After completing his presentation, Hussain Al-Wadie, chief advisor metals at the National Industrial Development Fund, commented that there is an obvious need for regulations in the scrap business within the kingdom. A few months ago, government officials held a meeting with scrap dealers and steelmakers to discuss and address the issue of scrap shortages in the country.

Two solutions stand out. One is to improve scrap generation within the country, which would enhance efficiency. The other is to establish a new company, backed by various shareholders, to import scrap. This company would operate on a cost basis and will have negotiation advantage against scrap suppliers, rather than individual companies importing scrap for their specific needs.

Abbas mentioned that Saudi Arabia has an installed capacity of 14.5 million tonnes/year for rebar, which significantly exceeds the current demand. Giga projects’ rebar demand can be met by local producers. However, merchant billet producers are struggling to find enough scrap and rebar re-rollers have difficulty in sourcing billet in the domestic market. 

Abbas advised potential investors to consider entering the steel industry to produce items that are in short supply in the country, such as round billet. He also noted natural gas shortages persist, while sourcing scrap through one company created by multiple founders could be a viable solution. Saudi Arabia also needs an iron ore pelletising plant, he added.

Meanwhile, one of Saudi Arabia’s most experienced steel experts, Mohammed Al Jabr, known in the country as the steel guru, said scrap shortages can be circumvented by using DRI and HBI, which are available in abundance in the region. Mills, especially induction furnace-based mills, can be modified to use DRI/HBI instead of scrap.