Saudi Arabia's third-tier long steel producers have moved beyond the 2023 fiscal year, and some are facing financial pressure due to very tight margins. Amid a subdued rebar market and high interest rates, some billet and rebar producers across the country have suspended production, with no improvement expected in the foreseeable future, Kallanish learns.

Saudi megaproject awards exceeded $90 billion in 2023, the highest annual value in a decade; however, rebar demand did not jump in 2023. On the contrary, retail sales were much lower than expected. "Tier-three rebar producers dominate the supply of rebar to retail rebar markets for private housing projects. Due to high interest rates in 2023, mortgage lending was 40% lower in the first eight months of the year compared to the same period in 2022, thereby subduing retail rebar sales," a senior mill official comments. 

Saudi National Steel (SNS), a wholly-owned subsidiary of Abu Dhabi-based Al Nasser Industrial Enterprises, which operates a billet manufacturing plant and rebar mill in Dammam Industrial Zone, is running on only one shift. Commissioned in 2017, the owner is open to negotiating a potential buy-out, sources tell Kallanish.

"2023 was difficult for participants in the steel sector, especially in the rebar and billet segment. In addition to high raw material [domestic scrap] quotes, diesel prices moved up at the start of the year [2024], which has boosted production costs, but finished product [rebar] selling prices do not exceed break-even levels. Unfortunately, there is no point in continuing the operation,” an industry participant explains. "I know a few other mills in Jeddah and Dammam have suspended their operations. Mills running on diesel generators are in serious trouble."