December 02, 2008

Rebar shortage could effect building boom in Saudi Arabia

It is reported that global shortage of steel is the only thing that could hold back Saudi Arabia’s building boom over the next decade.

Mr Saud Al Gusaiyer CEO of Dar al-Arkan one of the largest real estate developer in Saudi Arabia said “At present, we are not worried at all about a shortage of workers and engineers and the cement situation is looking good.”

Mr Gusaiyer said that “By the middle of next year, there will several new cement plants producing at full capacity, taking the kingdom’s cement production from 25 million tonnes a day to more than 48 million. By 2009, that might have reached 55 million tonnes, and over the next three years we expect the need for cement will not exceed 40 million tonnes a day, so there will be oversupply.”

Mr Gusaiyer said steel is set to be the only potential problem. “Saudi Arabia only produces 5% of the steel it uses. Everyone needs it. There is competition both from elsewhere in the region and from the rest of the world. Prices are going to go up, but they may be close to their peak already.”

Mr Gusaiyer concluded that “The construction boom has at least eight years of life left, regardless of whether the oil price remains high. Demand for housing is very strong, with a young population needing homes. Nothing is going to affect that demand.”