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| 01 December, 2016

Payments to contractors sharply boost Saudi steel prices- newspaper

Industry expects upswing in construction and contracting sectors.

Image used for illustrative purpose. A general view shows newly constructed residential buildings in Riyadh April 22, 2013.

Image used for illustrative purpose. A general view shows newly constructed residential buildings in Riyadh April 22, 2013.

REUTERS/FAISAL NASSER
29 November 2016

A decision by the Saudi government to pay the arrears to contractors before the end of this year boosted domestic steel prices by up to 23 percent this month, Zawya Projects reported, citing a local newspaper report on Tuesday.

Steel produced by the Saudi industrial giant Sabic was sold for 2,150 riyals ($573) per tonne this week compared with 1,750 riyals ($466) in the first week of November, Arabic daily Al-Madina said, citing industry sources.

Another type of steel by Sabic was sold for 1,890 riyals ($504) per tonne this week compared with 1,750 riyals ($466) in the first week of November 2016.

The price of steel produced by Al-Rajihi Company, one of Saudi Arabia’s largest steel makers, increased to 1,800 riyals ($480) from 1,700 riyals ($453) per tonne in the same period, the paper said.

It quoted a sales executive at a local steel firm as saying prices have risen because of an expected upturn in construction activity following payments to contractors. He said the increase followed a sharp decline in steel prices in previous months, adding that many producers have suffered huge losses.

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Abdullah Redwan, Chairman of the Contractors’ Committee at the Jeddah Chamber of Commerce and Industry said he expected a boom in the contracting sector.

“We expect an upswing in the contracting sector shortly following the government’s decision to pay contractors and the expected resumption of many stalled projects. This will push up demand for steel, cement and other building materials,” he said.

© Zawya Projects News 2016