Speaking at the SteelOrbis Spring 2013 Conference & 68th IREPAS Meeting taking place on March 3-5 in Doha, Adel Al-Mughram, senior marketing manager at Saudi Arabian company SABIC, underlined that oil is critical of Saudi Arabia and crude oil prices in 2013 are expected to average at $105 per barrel, which is very healthy. He also stated that geopolitical events have continued to influence the oil market, while Saudi Arabia continues to support OPEC's view by compensating for oil production shortages in other regions.
Regarding the Saudi Arabian economy, Al-Mughram stated that the strength of the Saudi economy and its plans to invest its budget surplus are the main factors boosting domestic growth, with the growth rate of the Saudi economy ranking among the highest growth rates worldwide.
The SABIC official pointed out that there is a link between average oil prices and global crude steel production, though he went on to state that it is difficult to make future projections regarding steel production and consumption in the short, medium or long term.
Mr. Al-Mughram stated that long steel product prices in 2012 were affected by certain factors during the year in question such as the weak economy in Europe, the decrease in scrap prices and slowing Chinese economic growth, while this last factor also resulted in an increase in export activity from China.
According to the speaker, the prices of scrap (on CFR Turkey basis) were stable in the first five months of 2012, but then declined by 13 percent during the second half of the year. On the other hand, prices of billets and rebar (Turkish billets and rebar on FOB Turkey basis) declined by 10 percent in the second half of 2012 compared to the first half. In 2013 and 2014 the prices in question are expected to decline due to the continuation of global economic difficulties and excess steel supply as compared to global demand, as stated by Mr. Al-Mughram. He went on to say that, while some softening in iron ore prices might be seen, SABIC generally expects to see stability in the global long steel markets in the current year and also next year.
Concluding his words, Mr. Al-Mughram remarked that long steel capacity and demand in Saudi Arabia are both at around 9 million metric tons per year. According to forecasts, Saudi Arabian capacity will be twelve million metric tons of long steel in 2015, while demand will be at lower levels of over 10 million metric tons. Demand for long steel products had jumped from 2011 to 2012. As for other GCC countries, as regards long steel product capacity and demand, capacity will be just under 8.5 million metric tons, while demand will be around five million metric tons, according to forecasts for 2015.