Posted on 17 Apr 2025
Amid low demand, Saudi Arabian merchant billet producers have reduced their offers for 130mm 3sp billet in the domestic market to below breakeven, Kallanish notes
This week, amid a liquidity crunch, the Dammam mill sold billet to a rebar re-roller in the Riyadh area at SAR 1,950/tonne ($520) ex-works, equating to SAR 1,990/t delivered, acknowledging that the selling price was at below cost.
Offers are at SAR 1,950-1,980/t ex-works, with the high end of the range offered in the central district, Riyadh and Al Kharj, and the low end in Dammam.
Given the conversion cost from scrap to billet is generally calculated at SAR 450/t ($120), local HMS 2 is sold in Riyadh, Al Kharj, and Dammam at SAR 1,550-1,575/t delivered, with premium and shredded at SAR 1,600-1,625/t. Any billet sold at or below SAR 2,000/t ex-works will result in a loss for producers.
"Due to desperation, a few rebar producers pulled down their rebar prices to SAR 2,130-2,150/t ex-works in the central region [Riyadh and Al Kharj] and SAR 2,170-2,180/t ex-works in Dammam, resulting in reduced billet transaction prices," explains a senior mill official. "If we stop production, our loss will be much higher; solely in order to run production, we accepted to sell at below our cost. There is no doubt that this is not a sustainable business practice."
Imported billet buyers received offers on Wednesday for 150mm 4sp billet at $458/t and 5sp at $462/t cfr Saudi west coast ports (liner out) for June shipment.
A longs producer on the west coast placed a purchasing enquiry for a 100,000-tonne lot of 4sp billet, targeting $450/t cfr (LO).
Source:Kallanish
