importing merchants will be officially allowed to raise prices by no more than 10 percent, a move which comes in the wake of the discovery by government inspectors of alleged price-fixing and hoarding of the commodity. Merchants say the price increase shows the Ministry of Commerce and Industry's understanding of current tough market conditions. The price rise was agreed to at a meeting Sunday between merchants and officials from the ministry. The meeting was called by the ministry to deal with large differences in the price of steel produced by local factories. The ministry's website has lists showing the differences in prices. Sources said the ministry “understood” the demands of importers raised during the meeting. Dr. Ali Al-Dayekh, Director of the Saudi Group for Steel, said the ministry approved his company's new prices, considering the developments in the international market. The current price has not covered his expenses in imported products from Turkey and China. He was losing more than SR500 per ton, he said. His company has sent its new price list to the ministry for approval. “The new price lists will apply starting Tuesday,” he said. He said the differences between local and global prices of steel had resulted in many importers holding back on deals with foreign companies. “But with the new decision many companies will strike new deals and the quantities in the market will increase.” Eng. Khaled Al-Dakheel, head of a steel manufacturing company, said banks are partially responsible for the current market crisis because they were reluctant to fund steel companies after the losses of 2008. He called on government to do away with custom fees on imported steel and to help facilitate its entry into ports. This will lead to a decline in prices, he said. The furor over the price of steel started Saturday after ministry officials conducted nationwide inspections. Assistant Minister of Commerce and Industry for Consumer Affairs, Saleh Al-Khalil, was quoted as saying that a number of the businesspeople under investigation were found to have been involved in refusing to sell steel and raising prices above market rates. In addition, sources at main sale points of reinforced steel in Jeddah, said that some authorized distributors of steel had stocked large quantities at private farms outside the city to later sell on the black market. They claimed warehouse owners move steel from factories to these farms “away from the eyes of consumers, ministry inspectors and the Saudi Basic Industries Corporation (SABIC)”. SABIC is the one of the world's leading manufacturers of chemicals, fertilizers, plastics and metals. The sources said this practice was aimed at creating a crisis in the market and result in a rise in prices. They said that such a crisis, coming at a time when there is an increasing demand in Jeddah for steel, would create a black market in which prices will be “very high and exaggerated”. Many affected contractors and consumers, the sources said, now have to register their names on long waiting lists to get their steel. Executive Director of Tamleek company, Eng. Zuhair Hamza, said a sudden and large rise in steel prices could halt the building of many projects currently under construction. Chairman of the Real Estate Assessment Committee at the Jeddah Chamber of Commerce and Industry, Abdullah Bin Saad Al-Ahmari, said the current rise in prices was unjustifiable, according to SABIC. He said this would create a crisis because contractors would stop buying steel until the prices come down.
