Businessman blames Commerce Ministry for crisis DAMMAM/JEDDAH – The Ministry of Interior has now been tasked with investigating price-fixing in the steel industry and to crack down on a growing black market in the commodity. According to an official, a dossier outlining the manner in which the collusion had taken place has been compiled by the Ministry of Commerce and Industry. This dossier has been handed over to the Interior Ministry which will be in charge of investigating the matter and take measures against those responsible. The official said that inspectors from the Ministry of Commerce and Industry are currently conducting inspections across the country to make sure all merchants and suppliers are adhering to the government's set prices. The inspectors are also trying to ensure no-one is stockpiling any steel. The ministry previously found that more than 20 steel distributors were involved in stockpiling quantities of steel and not selling so that prices could rise as a result of a lack of supply. Not everyone, however, is happy with the government's action. Chairman of the Eastern Province's Chamber of Commerce and Industry, Abdulrahman Al-Rashed, said that he held the Ministry of Commerce and Industry accountable for the exacerbation of the crisis because “the ministry has constantly rejected the demands of local factories to raise prices”. This had led to some factories “reducing their production”. One factory that used to produce 80,000 to 90,000 tons a month now produced no more than 10,000 a month, he said. He said that the Saudi Basic Industries Corporation (SABIC) was now selling their production “at a loss” because of the ministry's “insistence on keeping to the set price lists”. SABIC is the one of the world's leading manufacturers of chemicals, fertilizers, plastics, and metals. “The reinforced steel crisis is directly linked to the ministry's mechanisms of price setting,” he said. He said the ministry should let prices be determined by supply and demand; and be guided by the price of raw materials. He said the price of raw materials last year increased considerably, while the price for steel was the same because of the ministry's stance. Another factor in the crisis, he conceded, is that consumers had feared a shortage and had purchased large quantities beyond what they required. For example, a consumer who needed 100 tons had bought 200 tons, he said. Some contracting companies had done the same. Many of the depots of these companies contain large quantities of steel. Talk about a shortage of steel is mostly inaccurate, he added. A steel distributor, Muhammad Losker, complained that local factories have reduced the quantities allocated for distributors. The previous daily allocation of more than 250 tons has been reduced by 60 percent to about 80 tons, he said. The investigation by the government comes in the wake of the Commerce Ministry discovering widespread collusion and stockpiling across the Kingdom by unscrupulous businesspeople who wanted to take advantage of the construction boom. A number of merchants have already been questioned in connection with the situation. Sabic officials also met last month with more than 100 steel distributors to discuss raising the price of steel by SR500 to SR2,745 a ton. The step came after the Ministry of Commerce and Industry gave its approval for steel importers to increase their prices by 10 percent, to offset the greater costs to import the commodity. Experts said they expect the price of steel will not stabilize before mid-April. Prices for measures from 16 mm to 32 mm will eventually settle at SR2,900 to SR3,000 a ton for imported and locally-manufactured steel, they said.
