JEDDAH, 27 May 2008 — The spiraling steel prices in the local market has halted or slowed down several vital construction projects in the Kingdom.
“The situation is so bad that we do not get enough quantities of steel to complete the expansion of the Haj Terminal lounge at the King Abdul Aziz International Airport in Jeddah. Other vital projects such as the works at the King Abdul Aziz University and many plants in Rabigh are affected by the high price of steel,” Shareef Abu Auf, chief of Al-Haramain Co. for Contracting, told Arab News yesterday.
Abu Auf warned that public works in Jeddah where most major roads are being converted to underpasses and overpasses would seriously be hampered by the steel shortage. He blamed the steel distributors who hoard steel and other black-marketeers for the current shortage and consequent spurt in price.
Abu Auf feared that he would have to stop his contracting works because his company suffers an average daily loss of SR100,000 due to the shortage and unreasonable price of steel. “Whether there is work or not the company has to pay for the workers every day,” he added.
He demanded the Saudi Arabian Basic Industries Corp. (SABIC) and other national steel mills to stop exports so that the local demand, which is estimated at 11 million tons annually, be met.
Ayman Shaqlaih, director of the Al-Fouzan Iron and Building Materials Co. in Jeddah, said the sharp increase in the demand for steel and iron in the domestic and international markets is among the major factors that send the prices up besides the rise in the price of raw materials. Another factor is the dwindling supply of scrap, Shaqlaih added.
Shaqlaih also attributed the shortfall in the domestic market and rise in the price of steel to the contractors and traders in the neighboring Gulf countries, who used to buy heavily from the cheap Saudi market. He dismissed the charge that SABIC distributors were hoarding steel expecting further rise in the price as baseless.
“Of course we know that the price would rise further, but it never made us to resort to unethical practices such as hoarding and black-market. We supply to our contractors whatever quantity we get from SABIC and other sources. On the other hand, SABIC which used to supply us 300 tons daily in the past, has cut it to 90 tons. Under these circumstances we cannot meet our clients’ demand of 260 tons daily, “ he added.
He agreed that the superior quality of SABIC steel deserved a higher price in the market. “It is the cheapest steel available in terms of prices. While SABIC’s 16 mm steel is priced at SR4,060 per ton other companies sell it at SR4,650,” he pointed out.
Amid efforts to avoid situations that would stall work at vital projects, SABIC recently made an arrangement to sell directly to contractors.