Saudi Arabia’s steel industry, which has just started to recover after the several years of subdued demand, may receive support in the coming years, resulting from the potentially strong project market in the country. According to the experts, Saudi Arabia is a home for over 5,000 capital projects at a combined value of more than $1.6 trillion currently being at the pre-execution stage. The NEOM project worth $500 billion and to be constructed within a 26,500 square km territory is the largest investment for construction in the GCC region, with the first phase due for completion in 2025.
The key long-term drivers for investment implementation are the continuing economic diversification, social and housing programs, in addition to the government being determined to successfully carry out the developments. “Saudi Arabia is also actively seeking to improve its rail, airport, port and other transport-related infrastructure, as well as increase residential supply, healthcare, leisure and tourism facilities,” a source said, cited by local media. However, there are some doubts about whether Saudi Arabia will be able to finance its ambitious projects, SteelOrbis understands.
The experts foresee that the construction sector in Saudi Arabia will show a more confident recovery starting from early 2020, thus providing support to the local steel industry. The country’s monthly average rebar consumption is estimated at 420,000-430,000 mt and has a potential to slowly improve towards the end of the year on the back of the seasonal uptick. The healthier domestic market, which, however, lacks sustainability for now, keeps the mills from disturbing the potential export markets in the region amid the focus on local customers.