Amid the subdued domestic market, Saudi Arabian rebar and merchant billet producers agree the best solution is exports.

"The country has excessive longs production [supply exceeds demand], and this year rebar consumption in January-April was 1 million tonnes lower than last year in the same period,” opines a senior mill official.

Due to high interest rates and unexpectedly low rebar intake by mega projects, mills are concerned about rebar prices, demand and consumption in June, which overlaps with the Hajj season, Kallanish notes.

"Domestic demand will not increase in June, and tier-three mills have started to rent external warehouses to stock unsold rebar, carrying the financial burden on their shoulders,” a source familiar with the issue tells Kallanish.

The domestic benchmark mill is reported to be undertaking a maintenance shutdown until the first week of June, curtailing production. It is however still eyeing 100,000 tonnes of rebar exports from stock and examining the Far East and European markets.

"Rebar and wire rod bids in Europe are both at $600/tonne cfr Europe, whilst a buyer in Hong Kong is bidding for rebar at $570-575/t cfr actual weight,” a trader underlines. 

"Every Hajj season, rebar sales drop, which will not be different this year. There are two scenarios: either the benchmark mill would lower its rebar prices from May quotes, or it will roll over,” an experienced senior mill official opines.

"The Neom project, which consists of four projects within itself, developing in the seismically-active Tabuk province, mainly demands ASTM A706 (low-alloy-steel) grade 80 rebar be used in construction, for which direct reduced iron-route rebar producers can easily comply against scrap-route rebar producers,” he says. To compete, scrap-based mills will need consistent supply of selective grades, “which is not easy in the kingdom”, he adds.

Kallanish learns from an insider that corrosion-free epoxy-coated rebar is still under evaluation for use by Neom versus uncoated “black” rebar. "On the Red Sea coastline, where the Neom project is being developed, humidity and salt concentration is high," he explains, outlining the case for coated rebar.

Other than DRI-route rebar producers – Hadeed, Al Ittefaq in Saudi Arabia, UAE's Emirates Steel Arkan, Bahrain's Sulb, Oman’s Jindal Shadeed and Qatar Steel in Qatar – Saudi local merchant billet producers and rebar re-rollers should therefore find alternative, new markets, meaning exports, sources conclude.