Demand for iron, steel in Saudi Arabia likely to be promising: HADEED President

06/12/2022 Argaam Special
President of Saudi Iron Steel Co. Saleh Al Ansari

President of Saudi Iron & Steel Co. Saleh Al Ansari


Raw material prices have seen unprecedented fluctuations since the beginning of 2022, affecting all types of iron products, Salah Al Ansari, President of Saudi Iron & Steel Co. (HADEED), told Argaam in an interview.

 

The rise in iron prices was driven by sudden global factors, mainly the current geopolitical tensions in Europe and high global fuel prices.

 

The iron and steel industry is closely linked to countries’ economic conditions, Al Ansari said, expecting a promising future for demand in the Kingdom, especially as work is going around the clock on mega projects, in tandem with Saudi Vision 2030.

 

HADEED looked for investment opportunities in Mauritania to exploit iron ore and ensure sustainable supply chains. In light of instability in the iron ore markets, Mauritania Saudi Mining and Steel Co. (Takamul) represents a joint venture for mining and exploration of iron raw materials in basic manufacturing processes.

 

Al Ansari also pointed to the fluctuations of raw material prices and their implication on iron products throughout 2022, explaining the development in the company’s historical production capacity and projects.

 

Here’s the full interview with Al Ansari:

 

Q: What is the annual production capacity of Hadeed’s key product offerings?

 

A: Saudi Basic Industries Corp. (SABIC) prides in being the biggest iron and steel producer in the GCC region through its wholly-owned subsidiary, Hadeed.

 

Hadeed started its journey in 1979, when the company’s production capacity of long products reached 850,000 tons. In 1988, the capacity was ramped up to 1.2 million tons. In 1998, the company added a production line of flat products with a capacity of one million tons. The production capacity of all products was raised in the last few years to 5.8 million tons today (3.8 million and 2 million tons of long and flat products, respectively.

 

Q: How do you see iron ore prices globally? What are the factors that will impact its prices in the coming period?

 

A: Since early 2022, the prices of raw materials witnessed unprecedented fluctuations, which included all types of iron, such as rebar and rods, hot-rolled and cold-rolled flat products in coil form, along with other steel structures, and oil and gas pipelines.

 

The ruse in iron prices was driven by sudden global factors, mainly the current geopolitical tensions in Europe and high global fuel prices. This, in turn, affected the costs of supply and production chains. In addition, the Chinese government restrictions also impact production to reduce carbon emissions.

 

On the other hand, HADEED was distinguished by efficiency and reliability in all operational and commercial processes for all clients, being an integrated plant, which strengthened its competitive ability in sustainability by supplying diversified products even during tough market conditions and global crunches.

 

Although local prices are hit by global increases, price levels are still lower than European, American and regional markets.

 

Q: How do you see prices and demand levels in the Saudi market?

 

A: The iron and steel industry is closely linked to countries’ economic conditions. It is also largely connected to different business sectors, mainly building and construction, contracting and infrastructure. It is also related to car manufacturing, military industries, oil and gas industry, renewable energy and other value-added industries.

 

To this extent, we expect a promising future for demand in the Kingdom, particularly as work is going around the clock on mega projects, in tandem with Saudi Vision 2030. Several projects were launched in 2016, including NEOM, The Red Sea Project, Qiddiya, and other residential and tourism projects. As the Kingdom has already embarked on the implementation of the Vision 2030 projects, the Kingdom’s iron and steel industry will have a promising future.

 

However, the iron and steel industry is going through a difficult and challenging period amid unstable global economic conditions, such as the increased power and feedstock costs, in addition to the shortage of feedstock locally, which was directly reflected on production costs.

 

HADEED’s strategy centers on fulfilling the local market needs at first and ensuring to supply the market with all needs to avoid any shortage. This is based on the company’s commitment to realize the Saudi Vision 2030 goals, being a strong and ambitious driver for the Kingdom’s effort to reduce oil dependence and build a largely diversified economy for a sustainable future.

 

Q: How do you estimate the company’s market share in the Kingdom?

 

A: First, I would like to highlight the Kingdom’s position as the world’s fourth largest iron producer through environment-friendly direct reduction. The size of the local iron market nears 12 million tons of all products, manufactured by more than 40 plants.

 

Whereas HADEED manufactures a diversified package of long and flat iron and steel products, which are used in several sectors, such as building and construction, manufacturing industries, as well as oil and gas pipelines, etc., our market share can be variable from one sector to another, especially as HADEED is the only plant that owns a research and development center to provide the best solutions and ensure compliance with the highest standards.

 

Q: How many products are supplied by HADEED to mega projects, such as NEOM, Qiddiya, Red Sea and Amaala?

 

A: HADEED is proud of supplying more than 130 million tons of iron since inception to many construction projects around the world, including the Grand Mosque expansion in Makkah, Riyadh’s Center Point, and other giga projects implemented as part of Vision 2030, such as NEOM, through several agents, contractors and manufacturing industry centers.

 

Further, HADEED products are not limited to construction projects, as they are used in many value-added fields, such as renewables, electricity cables and home appliances.

 

Q: What about HADEED’s future projects?

 

A: The company deems the iron industry as a key pillar of the strategic national industries, given its pivotal role in delivering the Saudi Vision 2030 by diversifying income sources, supporting the related manufacturing industries, and enhancing local content.

 

HADEED also focuses on developing investment opportunities in the iron and steel industry by strengthening its competitive abilities amid accelerated geopolitical and economic variables.

 

As iron ore markets are unstable, Hadeed started looking for investment opportunities with Mauritania’s Société Nationale Industrielle et Minière (SNIM) to exploit the ore in the African country, being one of the best global mines in terms of quality and low production cost.

 

Meanwhile, Mauritania Saudi Mining and Steel Co. (Takamul) represents a joint venture for mining and exploration of iron raw materials in basic manufacturing processes.

 

HADEED stresses the importance of environmental sustainability in its manufacturing processes, as it ranks among the largest iron producers through environment-friendly direct reduction processes. This in turn helped the Kingdom record 60% less than global average carbon emissions in the iron sector.

 

The company is working on studying all low-carbon technology options. The Kingdom’s infrastructure ranks among the best worldwide, which allows HADEED to contribute to the Saudi Green Initiative (SGO) by 2030.

 

Owning the biggest scrap recycling facilities, HADEED developed its technology leveraging other petrochemicals, such as coke, which arises from olefin production (the company holds a patent in coke recycling from olefins through steel smelting, which reflects positively on environment).

 

The company is working on studying the possibility of using spent catalyst recycling in chemical industries as a source of alloy manufacturing. Other studies focus on carbon capture from the fourth reduction plant, as part of HADEED plan to reach carbon neutrality by 2050.

 

HADEED seeks to benefit from the national sector restructuring plan, through its research center, to enhance operating efficiency and diversify its competitive capabilities to ensure the continued reliability of its products in light of the current challenges.  

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