The Saudi market expects news on the rising rebar prices by SAR 100 per tonne in the few coming days. A market source said that this rise comes within the framework of the resume of major construction projects, saying that rebar producers in Saudi Arabia are waiting the proper time to announce such rises so that the market is prepared to receive such news.
The source, which is connected to steel industry and wants to stay anonymous, said that this raise is expected in the first week of the new Hijri year.
An expert in rebar production said that this rise comes as a result of the huge upward pressures on the scrap industry and prices, despite all the rises on global market in 2010 at an average of 9% reaching a volume of 1 billion tonnes, expecting at the same time further 7% in 2011 to reach 1.1 billion tonnes. Yet, the apprehension from rising prices in Saudi Arabia is still rampant among rebar producers in the kingdom and the region in general. The expert also said that China is the largest importer and producer of scrap due to the enormity of steel production and consumption in China.
Hence, any slight changes in the local capacity leading to changes in import demand can affect the seaborne raw material market worldwide. The source didn't rule out the quick response of China to the upward change in iron ore prices and the continuous iron ore purchase from international market, thus affecting all steel producers worldwide. The source also confirmed that China has much important agreement with Brazil and Australia, the largest iron ore producers in the world. An Australian report published lately said that the iron ore trade was and still is under the control of the 2 gigantic exporters: Brazil & Australia. Therefore, in the light of the fact that most of the production of those two countries is far cheaper in cost than that of India and China it is expected that exports of Brazil and Australia shall see a rise in the next 18 months.
It is also forecast that the Australian iron ore exports shall rise by 9% in 2011 to reach 290 million tonnes most of which coming from the idled capacity in 2008 through 2009. The Brazilian iron ore exports are also forecast to rise by 14% in 2011 to reach 330 million tonnes, reflecting the growth in capacities by 10 million tonne per year in Carajas iron ore mine of Brazilian Vale along with the rise in palletizing capacity that was severely hit during the crisis.