Sabic cuts steel prices
Riyadh, October 6, 2008
Saudi Basic Industries Corp (Sabic), the Gulf's largest steel maker, will slash some prices from Monday amid signs of slowing demand.
Sabic, whose subsidiary Hadeed is the kingdom's largest steel maker, said in a statement prices of reinforcing steel bars will be reduced by 720 riyals ($192) per tonne. It did not give details on the current level of prices.
Company officials could not be immediately reached for comment.
The price cut meant a reduction of between 14 and 15.2 percent depending on measurements and for steel deliverable to the eastern city of Dammam, which is the closest to Hadeed's plant, said a steel trader, who asked not to be named.
"Sabic had to cut prices after competitors made similar moves, although none of them were of Sabic's magnitude ... It says a lot about the sharp drop in demand," he said.
Monday's decrease will be the second by Sabic in less than a month after it slashed prices by 175 riyals per tonne last month, according to newspapers, including Okaz and Al-Yaum.
The September cut followed similar moves by rivals Al-Ittefaq Steel Products Co and Al-Rajhi Steel Industries.
Saudi Arabia has a production capacity of about 8.4 million tonnes, of which 5.5 million tonnes can be produced by Hadeed, according to the website of Arab Steel, an industry association.
Hadeed accounted for about 10pc of Sabic's turnover in 2007. Having almost doubled over the past two years, steel prices started to decline recently after authorities banned scrap metal exports and as spiralling costs hit demand growth while the government and the private sector spend billions of riyals on infrastructure and housing projects.
The rise in steel prices and increases in other input costs have raised fears over the viability of some projects.
Prices fell about 8 percent from their peaks in 2008, Shabir Rafiqi, chief financial officer of Al-Ittefaq Steel Products Co, said last month. He said he expected prices to decline by a further 8-15 percent by the end of this year. - Reuters