Saudi Arabian billet producers are facing a challenging market environment, caught between low bids from rebar re-rollers and high scrap prices. The falling rebar prices, driven by weak demand, are putting pressure on billet producers, while the shortage of scrap supply is driving up scrap costs.
In the current conditions, induction furnace-based merchant billet producers in the kingdom are quoting rebar grade 4sp billet at 2,010-2,050 Saudi Riyals (SAR) per tonne ($536-547) ex-works.
A notable deal was secured by an east coast-based billet producer, who managed to sell 2,000 tonnes of standard (rebar grade) billet at 2,050 SAR/tonne delivered to Riyadh. This translates to a net price of 2,010-2,015 SAR/tonne ex-works. Despite the lack of profit margin, billet producers are accepting these breakeven deal prices to maintain their operations and cover their overhead costs.
Scrap prices in different regions of Saudi Arabia vary, with delivered light grade scrap at 1,480 SAR/tonne in Jeddah, HMS 80:20 grade at 1,530 SAR/tonne, and bonus or bundled rebar scrap at 1,580-1,600 SAR/tonne. In Riyadh, HMS 80:20 is priced around 1,550 SAR/tonne, and in Dammam it is 1,550-1,580 SAR/tonne.
Billet producers expect the stagnation in both the rebar and billet markets to continue until the end of the Eid holidays around mid-April. A senior billet mill official commented that the market is "sleeping" as the Ramadan period comes to an end, and most private sector employees will take a vacation of around ten days. Business is expected to resume after the Eid holiday on April 15th.