Steel consumption decouples from oil prices as economy diversifies: Official

Engineer Matar Al-Harthi, Executive Vice President for Metals and Mining at the National Industrial Development Center, said domestic steel demand projections have been revised up from 17 million tons to 24 million tons by 2035, aided by expansion in renewable energy projects, increased investment in manufacturing, and national mega-projects.

Al-Harthi noted a shift in demand dynamics since the national plan launched in 2019. While earlier forecasts placed 2024 domestic steel demand at no more than 12.4 million tons, actual demand reached 16.2 million tons, over 30% above the original estimate.

Speaking on the sidelines of the Third Saudi International Iron & Steel Conference in Riyadh, he said this unexpected growth was not driven by government projects alone, but arose naturally from a structural transformation of the Saudi economy, with non-oil industries playing a larger role in growth.

He added that the traditional linkage between oil prices and steel consumption has decoupled since 2020, when demand rose strongly even as oil prices fell sharply—signaling a more diversified economy that is less reliant on conventional drivers.

Growing demand for flat steel and a wider range of imported products reflects the rise of new industries—autos, renewables and smart construction—that require more complex, specialized metal inputs.

He outlined sweeping changes in Saudi Arabia’s steel industry in recent years, stressing the need not for cosmetic fixes but a full recast of the sector’s structure to align with Vision 2030. The industry, he said, had suffered SAR 6 billion in cumulative losses, shrinking margins and eroding market shares, prompting a national plan launched in 2019 to address challenges with medium- to long-term flexibility.

Before 2019, the sector faced a widening supply–demand gap, mounting losses, low capacity utilization and an almost total reliance on low value-added products (79% of local capacity). As imports grew and advanced products—such as flat steel and specialized long products—were largely absent, competitiveness was slipping at home and abroad. The turning point, he added, was a bold decision to transform disparate company demands into a data-driven, sector-wide restructuring plan rather than ad-hoc reactions.

Under this approach, a national strategy has taken shape to strengthen industrial integration, lift operating efficiency, broaden the product slate, ensure fair competition and secure supply chains. The separation of Hadeed from SABIC was a “cornerstone,” positioning Hadeed to become a national champion capable of expanding into more sophisticated, higher-return product lines.

The transformation has been financial as well as regulatory: more than SAR 30bn in industrial investments have been attracted and major strategic partnerships established, notably “Bab Al-Khair”—a venture between Aramco, China’s Baosteel and the Public Investment Fund (PIF) to produce heavy plate for shipbuilding and energy. The plan also includes consolidating seamless pipe producers to raise efficiency and restarting large idle plants after tackling root causes of distress.

Challenges persist, he cautioned, including tight and costly scrap supply—especially as small mills now consume about 60% of domestic scrap demand—skills gaps in the local workforce, inefficiencies on some production lines, and the quickening pace of imports, which reached around six million tons in 2024 across a variety of products, some entering the market for the first time.

Looking ahead, the goal is to move from self-sufficiency to leadership: not merely meeting demand but building new downstream industries based on higher value-added steel. Projects already under way include an integrated flat-steel complex with capacity exceeding 4 million tons, a plant for heavy sections and rail steel, a high-performance long-products project, and a strategic iron-ore pelletizing facility to bolster supply security.

Al-Harthi called for expediting the creation of a national scrap-import company to meet rising raw-material needs as output expands, given the scarcity, high cost and variable quality of scrap in the Saudi market.