While the overall steel market in Saudi Arabia is still struggling to overcome the impact of Covid-19 on consumption, business activity in the rebar segment has been livelier. Buyers have chosen to restock in particular ahead of the upcoming VAT rate increase from five percent to 15 percent, which is going to be implemented at the end of June-early July, local producers stated.
Livelier demand has caused retail prices to increase by around $19/mt (SAR 70/mt) from earlier this month. As a result, ex-stock rebar produced by Rajhi Steel is available at $600/mt (SAR 2,250/mt) and ex-stock rebar from Hadeed is at $627-632/mt (SAR 2,350-2,370/mt), both delivered to customer. “The demand is very good because in around 15 days there will be a tax increase and everyone needs to secure the material early,” a local producer told SteelOrbis. In the meantime, market insiders confirm that the increase in the customs tax, planned earlier by the government, has been postponed until further notice.
Despite stronger business activity, local market sources mainly expect weak trade in July due to unfavorable weather conditions and the overall still slow recovery of end-user consumption. In addition, the new tax adjustments may also take time to be settled. “Now customers are restocking to avoid paying 15 percent VAT next month. In July, I do not expect Hadeed to revise prices,” another supplier told SteelOrbis.
Prices do not include VAT.
$1 = SAR 3.75