Al Ittefaq Steel says no slowdown in steel demand, scrap prices still high

Jassim Al Abbas, General Manager of Business Development, Sales and Marketing of Al Ittefaq Steel

Jassim Al Abbas, General Manager of Business Development, Sales and Marketing of Al Ittefaq Steel Product Co., said local steel demand in Saudi Arabia stands at 7.5 million tons per year, while the combined production capacity of all steel plants in the Kingdom amounts to around 15 million tons annually.

In an interview with Argaam on the sidelines of the third Saudi International Iron and Steel Conference, Al Abbas highlighted that there is no slowdown in local steel demand, contrary to common belief.

He explained that demand is growing at an annual rate of 2-3%, noting that new production capacities have acquired some market share from existing plants. This in turn created a false impression of a slowdown, albeit actual demand is still stable and balanced.

Rebar demand comes from all types of projects—including mega and giga projects tied to Saudi Vision 2030, as well as private investment and individual projects.

Al Abbas also pointed out that scrap prices in the Kingdom are among the highest in the Middle East, sometimes even exceeding global prices.

The local market suffers from limited scrap supply amid rising demand, keeping prices high and volatile, according to the executive.

He expected these pressures to intensify in the coming years as new steel plants enter the market in 2025. Four new factories relying on local scrap have recently joined the sector, and the continued ban on scrap imports will keep the market under increasing pressure.

Regarding the competitive landscape, Al Abbas said the sector shows a clear disparity between large plants with major investments and smaller ones with lower costs, which translates into a wide cost gap.

He noted that some small factories import steel billets at prices lower than local production costs, allowing them to sell at cheaper prices. As a result, this forces larger producers to slash their prices merely to survive.

However, he warned that this price undercutting is unhealthy, effectively eroding profit margins while pushing some companies to the break-even point, thereby threatening the industry’s stability.

On exports, Al Abbas said 2025 is likely to be one of the weakest years in terms of export volumes due to the restrictions imposed by target markets. This includes Iraq’s 30% import tariff on steel, in addition to exceptional conditions limiting exports to Yemen.

He expressed hope that market conditions will improve and export channels will reopen soon, noting that Canada reduced import quotas for this year after the Kingdom exported large volumes last year.

Al Abbas described the Syrian market as promising in the coming period, affirming that government support for national industries and Saudi trade exhibitions abroad should enhance export opportunities for Saudi corporates.

He confirmed that the Kingdom’s steel sector is moving strategically toward specialty steel production, which is used in heavy industries such as shipbuilding and railways.

The upcoming major events like Expo 2030 and the 2034 World Cup will further boost domestic steel demand. Moreover, the release of idle lands is bound to stimulate the construction sector and drive demand higher, the general manager added.

The sector is entering a positive phase, supported by Saudi Vision 2030 and major development projects, Al Abbas stated, expecting a gradual improvement in demand and prices during the third and fourth quarters of the year.

Al Ittefaq Steel is the second-largest private steel producer in Saudi Arabia. It operates several plants across the Eastern, Central, and Western Provinces, with a total production capacity of three million tons of rebar; two million tons of steel billets; and 1.5 million tons of sponge iron, Al Abbas concluded.