Saudi Arabia's rebar market slowed down last week. This week, it is silent due to the duty exemption granted to United Arab Emirates' largest producer, Emirates Steel Arkan (ESA), which produces sections, rebar and wire rod.

Last week, ESA received an exemption from Saudi Arabia from the rules-of-origin duty (see Kallanish passim).

Saudi Arabian tier-one mills’ rebar prices for October have been at SAR 2,670-2,750/tonne ($712-733) delivered within the kingdom. This is almost SAR 375/t ($100) higher than ESA's October-delivery domestic ex-works price at AED 2,222/t ($605) in UAE. Towards the end of last week, ESA increased its 10-32mm domestic rebar price by AED 38/t ($10) to AED 2,260/t ($615) ex-mill for November rolling.

Considering the $22-23/t transportation costs from UAE to Saudi cities Riyadh and Dammam, if Saudi mills do not change their rebar quotes, they will be at $75-96/t higher than ESA's Riyadh and Dammam delivered price. This is a genuine concern in the Saudi market, Kallanish observes.

Saudi rebar producers, traders and stockists, who have enjoyed strong market momentum since the Saudi Iron & Steel conference in Riyadh last month, are now concerned about what level November rebar prices will be at amid the ESA duty exemption impact.

"Since the rules-of-origin decree was announced and immediately taken into effect last year on 3 July, rebar supply from UAE stopped. We have extensive rebar production in the country, and resumption of rebar supply in the Saudi market from UAE should concern everyone,” explains a senior mill official. "We have caught a good momentum in the country since mid-last month and, undeniably, the protectionism was a shield for rebar producers in the country [Saudi Arabia].”

In October, Saudi tier-three mills’ rebar quotes at SAR 2,550-2,600/t ($680-693) ex-works or delivered within the same city were the lowest in Saudi Arabia. However, they were still higher than other Gulf Cooperation Council's tier-one mills’ domestic quotes.