Industry observes have voiced concern that costs for Saudi real estate developers will be hit hard by the recent move of kingdom authorities to lift a 16-year ban on exports of scrap metal.
The move was adopted by the Saudi government to comply with World Trade Organization regulations, which opposes Saudi protective laws such as that on scrap metal which favor certain market players.
The measure to lift the nearly two decade long ban was drafted in March, according to Gulf Daily News, soon after the kingdom joined the World Trade Organization in December.
The Saudi construction industry uses the bulk of annual steel consumption in the kingdom, currently estimated at around 5.5 million tons per year.
Meanwhile, the country produces around 3.75m tons of steel annually, falling short of the nation's steel needs.
The new move will significantly raise the country's imports of steel, since some of Saudi Arabia's scrap metal is recycled domestically to produce locally used steel, and until now, the kingdom's scrap metal market has been dominated by state-controlled Saudi Arabian Basic Industries.
With the lifting of the ban on exports, however, such scrap metal is expected to be sold abroad, mainly to India, Germany and China, where it can gain a higher price.
"It will affect the market," pointed out Farrukh Zaidi, a manager from the private Al Rajhi Steel company in Saudi Arabia. The demand is very high now," Zaidi added.
