KHOBAR - Saudi government spending, fuelled by reserves accumulated from oil exports would boost demand on industrial materials, particularly rebars and cement. Khaled Bin Mohammad Al-Suleiman, undersecretary at the Commerce and Industry Ministry, said on Monday the Kingdom's domestic steel production capacity will rise by at least 50 percent within the next three years. Saudi Arabia's steel production capacity stands at about 8.4 million tons and authorities have imposed restrictions on exports of both the commodity and scrap metal due to tight supply in the domestic market. “I expect production capacity at national plants to rise more than 50 percent in the coming three years,” Khaled Bin Mohammad Al-Suleiman, undersecretary at the Commerce and Industry Ministry, told Reuters. Saudi Arabian Basic Industries Corp (SABIC) accounts for about half of domestic production capacity with its Hadeed subsidiary. The output increase would come from expansion at Hadeed and at privately owned rivals al-Ittefaq Steel Products Co and Al-Rajhi Steel, he said. “Currently supply is still a bit higher than demand,” he said. In the five years to 2013, the government will spend $400 billion from oil revenues to develop infrastructure as well as build new schools, railways and universities. Suleiman also said he expected Saudi cement production capacity to rise 19 percent to at least 50 million tons by the end of 2010. “Demand for cement in the domestic market increased from 30 million tons in 2008 to 35 million tons in 2009,” he said. Saudi Arabia has recently lifted a ban on cement exports it imposed in June 2008. The ban was also aimed at forcing prices down.
