Steel and Iron in Saudi Arabia: Comprehensive Sector Analysis and Recent

The steel and iron sector in Saudi Arabia is a major industrial cornerstone, enhancing the national economy by supporting construction, infrastructure, and the oil and gas sector. This sector falls under the basic materials category on the Saudi financial market (Tadawul) and sees significant investments from both public and private sectors, playing a crucial role in achieving the economic diversification goals of Vision 2030.

Steel and iron are essential for providing raw materials for major national projects such as smart cities (NEOM and The Line), housing, and transportation initiatives. The sector also supports downstream industries, reduces reliance on imports, creates specialized jobs in technical and engineering fields, and strengthens the Kingdom’s industrial supply chain.

Saudi Arabia’s steel and iron sector has experienced steady growth in recent years, driven by improved local demand. Estimates indicate that domestic crude steel production ranged between 7 and 9 million tons annually during 2023–2024, with annual growth of 1–3%. This is attributed to the expansion of construction and petroleum projects, and rising demand for steel products such as pipes and metal structures.

Local production covers about 60–70% of national consumption, with the remainder imported from international markets. This ratio is significant as the Kingdom seeks to increase self-sufficiency in steel and reduce dependence on imports, especially in the context of government plans to enhance industrial security and localize supply chains.

Steel and iron prices in Saudi Arabia are influenced by both global and local factors. At the start of 2024, the price of rebar in the local market stood at around SAR 2,500–2,800 per ton, down from previous levels due to slowing demand and a global surplus. Imported iron ore (pellet) prices rose to about $130 per ton, driven by higher export duties and support for local industry.

Steel scrap averaged around SAR 3,000 per ton, with demand increasing due to the gradual shift to electric arc furnaces that use scrap as a primary input. All these factors shape price dynamics, as the local market responds to international price fluctuations, project demand, and government protection policies.

The Saudi steel and iron sector includes several major companies listed on the financial market, most notably Saudi Steel Pipe Company (SSP – 1320), specializing in steel pipes for the oil and gas sectors. Its share price during Q1 2024 was around SAR 50, with a market capitalization exceeding SAR 1.2 billion.

Other key players include Riyadh Steel Pipes Company, an emerging firm in the field, and United Steel Company, which produces rebar and galvanized steel. Saudi Iron & Steel Company (Hadeed), a subsidiary of SABIC (and thus Aramco), is one of the largest national producers, although its shares are not publicly traded. These companies cover the majority of local demand and are working to develop their products and improve production efficiency.

Investments in the Saudi steel and iron sector have seen a notable revival in recent years. Agreements have been signed with major international companies to establish advanced plants with investments estimated at billions of riyals between 2023 and 2025. Among these projects, the collaboration between Aramco and SABIC to develop Hadeed and increase production capacity through a shift to electric arc furnaces stands out, with an initial project value of about SAR 15 billion.

Smart city projects, especially NEOM, are also attracting significant investments to establish high-tech steel plants and smelters, with investment volumes reaching SAR 20 billion. These investment directions reflect Saudi Arabia’s determination to achieve local supply security and increase local content in the steel and iron value chain.

The performance of Saudi Arabia’s steel and iron sector relies on several competitive factors. Key drivers include government investments in infrastructure projects, policies supporting industry localization, and the availability of cheap energy sources that give local plants a cost advantage.

However, the sector faces challenges such as raw material price volatility, competition from low-cost steel imports (especially from China and India), and price pressures from global surpluses. The Saudi government has implemented protective measures such as customs duties and quality controls, along with financial and logistical support, helping local companies compete and improve operational profitability.

The Saudi steel and iron industry is gradually adopting electric arc furnaces (EAF), which rely on melting steel scrap instead of raw iron ore. This technology helps reduce carbon emissions and fuel costs, aligning with the Kingdom’s environmental goals.

Adopting electric arc furnaces requires significant infrastructure investments and the provision of reliable, competitively priced electricity. The focus on scrap recycling also supports sustainability and reduces reliance on imports. Major Saudi companies are racing to upgrade their production lines to keep pace with global shifts in this field.

Several factors influence the performance of steel and iron companies in Saudi Arabia, including:

1. Growing local demand for steel products driven by housing and energy projects.
2. Fluctuations in global iron ore and scrap prices.
3. Government policies on financial support, export, and import facilitation.
4. Regional and international agreements that may open or close export markets.
5. Evolving competition with regional and international producers in the Gulf, Turkey, and China.

All these factors interact to create a dynamic market environment requiring companies to continuously adapt to changes.

Projects under Saudi Vision 2030, such as NEOM and The Line, are stimulating demand for steel and iron due to the massive need for construction materials and metal structures. These projects require high-quality steel products with specific standards, prompting Saudi companies to invest in production technology and collaborate with international partners.

Government spending on transportation, energy, and industrial complexes also creates additional growth opportunities. Increasing local content and localizing supply chains has become a strategic government direction, giving the steel and iron sector a strong boost to enhance production capacity and add value to the national economy.

Financial data for listed steel and iron companies indicate a significant improvement in profits during 2024. For example, Saudi Steel Pipe Company (SSP) recorded a 50% increase in profits in H1 2024 compared to the same period in 2023, driven by higher demand for oil and gas pipes. The company’s price-to-earnings (P/E) ratio ranged between 12–15, with dividend distributions totaling SAR 200 million.

Other companies, such as Riyadh Steel Pipes, face high P/E ratios due to their recent start and low profits, while focusing on reinvesting returns for expansion. These variables reflect market dynamics, with profit margins and performance varying by product type, investment size, and developments in local and regional demand.

Despite promising opportunities, the steel and iron sector in Saudi Arabia faces fundamental challenges, including:

1. Competition from low-cost imported steel.
2. Inflation in input costs such as scrap, iron ore, and energy.
3. Fluctuations in final product prices due to global oversupply.
4. Ongoing need for investment in technological upgrades.
5. Evolving regulatory requirements and quality standards.

Addressing these challenges requires effective government policies, close cooperation between the public and private sectors, and continued investment in research and development to improve productivity and reduce costs.

Forecasts indicate that local demand for steel in Saudi Arabia could rise to 10–12 million tons annually by 2030, driven by the expansion of infrastructure and energy projects. There are promising opportunities in manufacturing oil and gas pipes, metal structures for industrial projects, and exporting high-quality steel products to regional markets.

The shift toward local mining of iron ore and increased reliance on domestic scrap supports sector sustainability and reduces risks from international supply fluctuations. Investments in electric arc furnaces and recycling further enhance competitiveness and alignment with global environmental standards.

The Saudi steel and iron industry is witnessing growing interest in recycling metal scrap as part of the move toward sustainability and reducing the carbon footprint. The government has launched programs to support scrap collection and processing, with subsidized gas provided to recycling smelters.

This approach helps lower production costs, reduces reliance on imported raw materials, and supports the Kingdom’s environmental goals. Major companies are also expanding the use of local scrap, developing advanced technologies to recover iron from industrial waste.

The Saudi steel and iron market is affected by international factors such as oil prices, shipping costs, and geopolitical tensions. Saudi companies rely on importing part of their iron ore needs from global markets, making local prices subject to international fluctuations.

Trade agreements and customs duties also influence competition with producers from China, India, and Turkey. The government seeks to balance market openness and support for local production through flexible policies that enhance the competitiveness of national companies and prevent price dumping.