Saudi Iron and Steel Company (Hadeed) has lowered its rebar prices to the domestic market by SAR 200/tonne ($53) effective from 1 September. This is in order to discourage buyers from procuring Turkey-origin rebar, the prices of which have fallen steadily since the end of May, market participants tell Kallanish.

The steel producer subsidiary of Sabic’s last price cut was in February, prompted by oversupply and declining international prices. Many of Saudi Arabia’s rebar producers have failed to clear the backlog of rebar inventories which initially accumulated when the construction sector slowed drastically in 2013 on the government’s illegal labour crackdown.

There are now growing concerns over possible postponement of new construction projects and a slowdown in existing ones due to restricted cash availability as a result of lower oil prices (see related article). Moreover, Turkish rebar offers to Saudi have slumped to $385/t cfr Jeddah from $470/t at end-May.

“Whenever international prices deviate, Sabic’s policy is to maintain price stability,” a Saudi trader says. “What’s pushed them is the Turks offering lower prices. You can’t have a tonne of steel selling at SAR 2,400/t in Saudi when it’s SAR 1,600/t in United Arab Emirates.”

Hadeed is presently heard offering 16mm diameter and above (base price) rebar at SAR 1,970/t ($525) delivered in Jubail, SAR 2,000/t del in Riyadh and SAR 2,045/t del in Jeddah. De-coiled rebar is offered at a SAR 150/t discount, sources say. The steelmaker could not be contacted for comment.

“There is on hand a healthy volume of work from projects awarded earlier,” a trader observes. “The valid concern is about the expected cash-flow slowdown for these projects, plus any future stream of new projects. Both are very valid concerns, and unless the economic situation changes, we will certainly see an overall [construction] slowdown.”