S. Arabian steel sector fears trade diversion due to US tariffs, seeks urgent measures

Thursday, 29 March 2018 12:13:51 (GMT+3)   |   Istanbul

Saudi Arabia's National Committee for Steel Industry has stated that US President Donald Trump’s recent decision is not expected to have any significant adverse effect on Saudi steel and aluminum exports to the US given their limited volume at the present time, which reached around 150,000 mt in 2017, consisting particularly of seamless steel pipe, galvanized steel and pre-painted steel coils. These products have a large domestic production surplus.

Commenting on Trump’s decision, Rayed Al-Ajaji, chairperson of the National Committee for Steel Industry, stated that the real concerns of the Saudi steel industry arising from this decision are that countries who export a large part of their production surpluses to the US market will be most hurt, and their export capabilities will decrease to unacceptable levels, prompting them to immediately seek alternative markets to export their production surpluses and compensate for the lower exports to the US. According to Mr. Al-Ajaji, Saudi steel producers fear that these countries would target markets lacking protection and having low tariffs. They will undoubtedly find Middle Eastern markets, and particularly Gulf Cooperation Council (GCC) markets, easy prey. The Saudi market, being the largest in the region and lacking any protectionist measures, will be a prime target and tempting grounds for dumping by those countries that will spare no effort to find alternative export markets for their production surpluses, the Saudi official stressed.

Mr. Al-Ajaji pointed out that, as steel is a strategic industry heavily relied upon to contribute to the realization of the Kingdom’s Vision 2030, it truly needs strict and immediate action to be taken to protect it against unfair competition.

Abdulaziz Shaheen Al-Dosari, director of the Steel Pipes Unit at the National Committee for Steel Industry, stated that national factories are demanding partial protective measures by raising customs duty from five percent to the 15 percent maximum limit permitted by World Trade Organization (WTO), adding that this is the least that can be done to help this national industry partially survive in the face of excessive imports.

On the national steel rebar industry, Abdulaziz Al-Hudaib, vice chairperson of the committee, stated that over the past few years most domestic operations have reduced to below 50 percent of capacity utilization in the rebar industry, due to the availability of 12.5 million mt of domestic production capacities, while demand has declined to just around 6.3 million mt. The continuation of significant imports has further complicated the scene and heightened difficulties, and so urgent protective measures are needed to safeguard the industry against the arduous conditions which may extend in some cases to causing collapse, Mr. Al-Hudaib added.