Despite Oil Prices’ Drop, Average Iron Prices Rise

Average iron prices in the Kingdom, on an annual as well as monthly basis, have increased for the first time, in four months, last November.

Cement costs, on the other hand, continued to fall on the same basis, for the fifth month, in a row, while the prices of other building materials fluctuated.

Average iron prices rose to SR3.53 thousand per ton, up 2.63 % from SR3.44 thousand, in October, up 22.09 percent from SR2.89 thousand per ton, in November 2020, General Authority for Statistics showed.

This was unfolded despite a 21.94% drop in the average iron ore price, in November, to $94.58 per ton, compared to $121.17 in October, and a 21.83% drop compared to $120.99, in November 2020.

However ore prices rose in the first half of this month, hitting $107.04 according to December 14 pricing, up from $105.207 in the previous month.

Iron prices in their ultimate form are influenced by a variety of factors, including freight rates, transportation, power, insurance, and labor costs, all of which fluctuate and vary, in addition to iron ore and scrap iron prices.

In spite of the coronavirus pandemic, the Saudi iron and steel factories maintained their production capacities and met the needs of the local market, according to statements released by the National Committee for the Iron Industry, in June 2021.

Kingdom’s factories’ capacity in the industry of reinforcing bars and coils of iron bars reached more than 13 million tons, per annum, while local consumption does not exceed 7.2 million tons.

In addition to the fact that the capacity of the factories in the industry of reinforcing bars and coils of iron bars, has gone beyond all expectations.

The remainder is exported to regional nations, in addition to the United States and European Union countries such as Italy, Spain, Greece, Poland, and Portugal, as well as several African countries and China, according to the committee.

The World Steel Organization rated the Kingdom among the top 20 iron and steel producing countries, in the world, last year, according to the Federation of Saudi Chambers of Commerce.

Cement currently at its cheapest price levels, not seen in 18 months.

Average cement prices fell for the fifth month, in a row, in November, falling to SR13.66 per 50-kilogram bag, the lowest level in 18 months and the lowest since June 2020, when the bag cost only SR13.43.

Nonetheless, the average price of cement in November was SR13.73, down 0.71% from October and down 3.5% from November 2020 levels of SR14.15 a bag.

In spite of the fact that sales of as many as 17 cement businesses, operating in the Kingdom, continued to fall on an annual basis, in November, the decline was the lowest in the previous six months.

Positive signs for companies

Despite this, we discover that both cement sales and average selling prices show a favorable trend in the first 11 months of 2021, with average prices reaching SR13.91 per bag, compared to SR13.77 in 2020, according to Maaal follow up and research unit’s observation.

Production increased by 1.1% to 48.8 million tons at the end of November 2021, up from 48.3 million tons the previous year, while local sales increased by 2.6% to 47.3 million tons at the end of November, up from 46.1 million tons the previous year.

Cement exports totaled 7.8 million tons in the first 11 months of this year, up from 5.7 million tons, at the same time last year, boosting Saudi cement exports to a new high, not seen in prior years let alone in the first 11 months.

Cable rates grew by 1.01% in November compared to October, jumping 32.27% on an annual basis and 32.27% in November.

In November, ready-mix concrete costs increased by 1.37% on an annual basis and 0.27% on a monthly basis, while timber prices increased by 8.16% on an annual basis, but decreased by 0.71% on a monthly basis.

Source: Tadawul, Saudi Chambers’ Federation, Maaal follow up unit