Middle East Billet Producers Struggle with Falling Demand and Weak Prices

Demand Decline Puts Pressure on Middle East Steel Mills

In the first half of April 2025, Middle Eastern billet producers faced financial strain. Falling demand and weakening prices were the main contributors. Bids for commercial billets in Gulf Cooperation Council (GCC) countries dropped by $11 per ton, reaching $449 per ton CFR by April 18. Several mills in Saudi Arabia were forced to sell billets at $520 per ton EXW, according to Kallanish. Despite the downturn, plants are refraining from shutting down completely. They hope for a recovery in the coming months.

The estimated breakeven price for these mills is $533 per ton EXW, considering scrap costs and processing. A company representative said that shutting down production temporarily would lead to higher losses. Restarting equipment would also add significant costs.

Price Decline Across Regions and Shifting Market Dynamics

In southern Europe, billet prices dropped by €3 per ton in the first half of April. Prices reached €492 per ton EXW by April 18. Lower rebar prices in the GCC region contributed to this decline. Re-rollers refused to purchase billets at March prices. As a result, producers had to adjust their pricing strategies.

In China, steel billet prices fell by $11 per ton in mid-April. As of April 12, prices dropped to $407 per ton EXW. Warehouse stocks of billets in Tangshan decreased by 67,900 tons. This decrease may lead to a potential price increase. However, increased rebar stockpiles indicate weak demand for finished products, offsetting any price rebound.

Middle East Mills Turn to Southeast Asia for Billet Imports

With weak local demand, Middle Eastern re-rolling mills increasingly import billets from Southeast Asia. Large shipments from China and Indonesia have been confirmed. These imports help producers maintain production at more affordable costs. In Turkey, billet prices dropped by $10 per ton to $520 per ton EXW in April. Local rebar producers are waiting for further price declines and are not eager to replenish their billets. Instead, they prefer to source billets from Southeast Asia.

Energy Tariffs and Production Costs Impacting Steel Prices

In Oman, electricity tariffs increased by 33% during peak hours as of April. This hike will remain in effect until the end of July. The tariff aims to prioritize energy for households during the hot season. Initially, this increase was expected to push rebar prices higher due to reduced capacity utilization in regional mills. However, weak demand for rebar suggests that limiting production will only stabilize steel prices.

As the situation unfolds, Middle Eastern billet producers continue to navigate tough market conditions. They hope for a recovery in demand to restore balance in the region’s steel industry.