Saudi Arabian steel mills are shifting their strategy in response to a subdued retail market for rebar, opting to supply directly to large construction projects. This move comes as demand for rebar from major developments in the kingdom continues to grow.
In a notable development, a west coast-based mill has reportedly signed a significant rebar supply agreement with a contractor for a large-scale project. The deal, valued at SAR 2,325 per tonne ($620) delivered, covers a substantial volume of nearly 40,000 tonnes of rebar. The terms of the agreement include a 30-day letter of credit.
This direct supply approach allows steel mills to bypass traditional retail channels and secure larger, more stable contracts. It also enables them to better meet the specific requirements of mega-projects, which often demand high volumes of rebar with particular specifications.
The trend towards direct supply agreements comes at a time when Saudi Arabia is undertaking numerous ambitious construction projects, including the futuristic city of Neom. These developments require vast quantities of construction materials, including specialized rebar grades for seismically active areas and corrosion-resistant varieties for coastal regions.
As domestic demand fluctuates and competition intensifies, Saudi steel producers are exploring various strategies to maintain their market position. This includes not only securing direct supply contracts but also considering export opportunities to balance production and demand.
