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The prolonged and rapid growth of the construction sector has proved too heavy a burden for its main driver, the Saudi state budget. The government has had to revise its ambitious megaprojects under the Vision 2030 programme. The most expensive futuristic concepts have been postponed, with funding redirected to projects with critical deadlines and a hard economic rationale. The war in the Persian Gulf is making matters worse. Hence the inevitable correction in steel demand.
The Saudi model is a classic one for the MENA region. Long products account for the bulk of steel consumption. Government efforts to develop the automotive industry have so far not affected the market structure. A significant share of flat steel product sales is generated by the pipe industry. Its main customers are oil giant Saudi Aramco, state agency SWA and state-owned SWPC, operators of the desalination system.
The share of imports in the steel balance declined steadily in 2021-2025 despite rising demand. This is linked to the development of domestic steelmaking and rolling capacity. The decline took place in the long products segment. Saudi metallurgy covers demand for high-tech flat steel products only partially. They remain the backbone of imports, above all in value terms.
Imports of semi-finished steel products are included in the overall statistics for foreign supplies. They are accounted for by private mini-mill rerollers. For them, this is a flexible tool – buying from third-party producers when domestic billet prices rise above external ones.
Imports of long products persist because of logistics factors. Supplies from nearby mills in the UAE and Oman to border regions are often cheaper than domestic transport across the desert. They also pick up during peak demand at construction sites.
China is by far the leading importer, with an annual volume of $3.5-4.9 billion. It is the main source of cheap flat steel products. India, at $1.5-1.8 billion, dominates supplies of billet to Saudi mini-mills. Plate products are also supplied from there.
They are followed by the UAE at $1.3 billion, Bahrain at $1.2-1.6 billion and Oman at $0.8-1 billion. This route supplies rebar and sections, as well as finished construction steel structures (MK). Immediately behind them is South Korea at $0.7 billion. It supplies high-tech flat steel products for the automotive industry and megaprojects.
Saudi producers occasionally ship steel products to neighbouring Gulf Cooperation Council (GCC) countries, Iraq, Jordan and North Africa. But they are mostly focused on the domestic market. Annual exports amount to $0.5-1 billion, mainly rebar. The figure includes re-export operations by GCC steel traders. They use Saudi customs territory as a transit hub.
Construction accounts for 70-75% of all steel consumption. Outside the raw materials sectors, it is the main driver of the Saudi economy. Housing construction makes the biggest contribution to the sector’s performance. This is a cornerstone of the state’s Vision 2030 economic strategy.
The decline in the number of permits issued in 2025 does not mean the sector is cooling. The correction was caused by a decline in private low-rise construction.
As recently as 2016, the homeownership rate in Saudi Arabia stood at 47%, and waiting lists for state housing support stretched for many years. The launch of the Sakani state programme in 2017 changed the situation, substantially boosting steel demand.
Sakani works in conjunction with Saudi Arabia’s state Real Estate Development Fund (REDF). Through it, programme participants receive a non-repayable grant of $27,000-40,000 for the down payment on a home under construction. If the down payment is higher, the borrower pays the difference. If that amount is sufficient, the state covers it in full from its own funds.
REDF then pays the bank monthly interest on mortgage debt of up to $133,000. If the loan is equal to or less than that amount, the borrower is fully exempt from paying interest. If it is higher, the borrower’s payments are charged on the outstanding balance excluding the $133,000.
Roshn and NHC are responsible for Sakani’s practical implementation. Roshn is the largest state developer, created directly by the country’s sovereign wealth fund (PIF). Roshn directly builds vast residential districts in Riyadh, Jeddah, the Eastern Province and other regions.
These are modern neighbourhoods with developed infrastructure (parks, schools, mosques, shopping and medical centres), designed to urban planning standards with an emphasis on sustainability and reducing dependence on cars.
The National Housing Company (NHC) operates on a different model. It receives vast land plots from the state, often free of charge or on preferential terms, develops large-scale real estate projects and brings in private construction companies to execute them.
They are eager to work with NHC. Through it, the state provides basic utility connections and guarantees sales of completed housing through Sakani. At the same time, NHC remains the project operator. It is the company that runs large-scale tenders, procuring millions of tonnes of rebar, cement and steel structures. Those volumes are then distributed among subcontracted construction companies.
Demand for steel in the residential construction sector is driven by two main players, Roshn and NHC. Centralized procurement allows the state to manage Sakani’s costs more effectively. The increase in homeownership to 68% by the end of 2025 proves the effectiveness of this model.
Among the largest projects of recent years:
Infrastructure projects in Saudi Arabia primarily drive demand for flat steel products and specialized pipes. Freshwater shortages are the main reason why the largest volumes of funding are allocated to SWA and SWPC.
To deliver water from desalination plants on the Red Sea and Persian Gulf coasts to inland regions and the capital, major trunk water pipeline systems are being laid. Key projects in recent years:
Taken together, this amounts to hundreds of thousands of tonnes of LSAW and HSAW pipe produced from steel plate.
Saudi Aramco’s infrastructure work is the second-largest driver of flat steel demand. In 2021, the company launched the $8.8 billion MGS-3 megaproject (Master Gas System Expansion Phase 3). The project provides for the laying of 4,153 km of new trunk and distribution oil and gas pipelines.
Among them, the 1,712-km «East – West» trunk pipeline (EWGP) and the 1,230-km «Southern Transit Route» (EWJZG-1) stand out. These facilities use LSAW pipe made from corrosion-resistant heavy plate. Contracts for these volumes were fulfilled by both leading global manufacturers and local players, such as Saudi Arabia’s East Pipes Integrated Company for Industry.
Another Saudi Aramco megaproject is the development of the Jafurah shale field, which began in 2021. As part of Phases I and II, the giant Jafurah Gas Plant and associated infrastructure were built. The project consumed hundreds of thousands of tonnes of OCTG.
The construction of transport infrastructure in Saudi Arabia drives demand for long products and heavy structural sections. The flagship project of 2021-2025 is the construction from scratch of the Riyadh metro, one of the largest in the world. It comprises 6 underground lines with a total length of more than 170 km and 85 stations. Hundreds of thousands of tonnes of rebar, steel pipe, beams, rails and steel structures went into it.
The Saudi authorities are focusing on solar power. But wind power is also advancing. The 2 GW Starah Wind Power Plant and 1 GW Shaqra projects are currently under active construction. The exclusive wind turbine supplier is Chinese manufacturer Goldwind.
Giant 10 MW turbines will be installed in the Saudi desert on towers 148 m high. These facilities are colossal consumers of heavy structural sections and heavy plate. Building tower foundations in sandy soil requires enormous volumes of rebar.
Steel consumption in Saudi Arabia in 2021-2025 rose steadily thanks to Vision 2030. The slight dip in 2023 was due to the Saudi central bank’s (SAMA) tighter monetary policy. A record 15.6 million tonnes was reached in 2025 amid a rise in the budget deficit to 5.3% of GDP. It was the highest for the entire post-pandemic period.
The reason was the drop in global oil prices to $69.1/bbl. According to IMF estimates, Riyadh needs $85-91/bbl to bring the state budget «to zero».
The financial stress of 2025 forced the government to switch to strict budget discipline on megaprojects.
«We have absolutely no ego. If we have announced something but see a need to adjust plans, change priorities, postpone or cancel a project, we will do so without batting an eye», – Finance Minister Mohammed Al-Jadaan said on December 2, 2025, commenting on the approved 2026 state budget.
No one has canceled Vision 2030 outright; it is a matter of personal prestige for Crown Prince Mohammed bin Salman Al Saud. But the ultra-expensive ambitious megaprojects have been revised at his instruction.
One example is Oxagon, the industrial and logistics hub within the NEOM megaproject. It was initially conceived as the world’s largest floating industrial complex, city and port on the Red Sea coast, in the zone of key shipping routes. The cost of this project, which included, among other things, construction of a giant 1.5 GW data center, was $12 billion.
In the end, Oxagon was started onshore, on the site of the former port of Dubai. A relatively small 900-m pier has been built there, and dredging has been carried out to accommodate large-tonnage vessels. Construction is now under way on a container terminal with capacity of 1.5 million TEU per year. The «project of the future» has turned into an ordinary onshore industrial and logistics park.
The equally futuristic The Line project (also part of NEOM) envisages the construction of two parallel mirrored skyscraper walls 500 m high and 170 km long. The project was presented as a «city of the future» without surface roads, cars or CO2 emissions.
The width between the walls of the skyscraper buildings is to be just 200 m. Within this space, all life is organized vertically: housing, offices, parks, social infrastructure and high-speed transport underground.
According to an internal audit leaked to the media, the actual cost of the project is $8.8 trillion, or 25 annual budgets of Saudi Arabia. In the end, instead of 170 km, work was launched on a 2.4-km section. Foundations were partially built there, but construction was later suspended until 2030.
The Mukaab project was also caught in the “freeze” – construction of the world’s first fully immersive attraction building in Riyadh, with a $50 billion price tag. Inside this giant 400-m-high cube, more than 2 million m² of retail space, hotels, universities, museums and premium housing are planned. The cube’s inner walls are to form a colossal circular LED screen with holograms generated by AI technology. Construction stopped at the earthworks stage.
The Trojena ski resort project met a similar fate. It was planned to be built in the desert in time for the 2029 Asian Winter Games. An artificial freshwater lake 2.8 km long, for which water was to be pumped into the mountains from the Red Sea. A futuristic town in a huge mountain rift with residential districts, entertainment zones, gardens and shopping centers.
Trojena’s initial cost was $19 billion, and after detailed planning it rose to $38 billion. In March 2026, the Public Investment Fund (PIF), through NEOM Co. terminated its contract with Italy’s construction group Webuild Group. The Italians managed to partially build the dams for the future lake and partially excavate the tunnels for the water pipeline. The project has been moved to “frozen” status, and the 2029 Asian Winter Games were reassigned to Kazakhstan.
Halting the ambitious megaprojects came at a high cost. After reviewing them, PIF wrote off losses totaling $8 billion. As a result, steel consumption will fall overall to 12.8 million tonnes in 2026.
War in the Persian Gulf, missile strikes and drone attacks on oil infrastructure have driven Saudi oil exports below 4 million bbl. per day by September 2026. The pre-war level in recent years was 6-6.5 million bbl. The increase in global oil prices to $90.86/bbl in January-September does not offset the loss of physical export volumes. This implies further cuts in budget spending in 2027, the main driver of steel demand.
However, implementation of Vision 2030 will continue, supporting finished steel sales at the baseline level for the Saudi economy. The clear demand drivers will be preparations for Expo 2030 in Riyadh and for the 2034 FIFA World Cup, which Saudi Arabia will host. The World Cup is still a long way off, but before that the kingdom will also host the 2027 AFC Asian Cup. That is why work on sports infrastructure development is continuing at full speed.
Of the 15 planned tournament stadiums, three are already under active construction. Aramco Stadium, with 47,000 seats, is scheduled to be the first completed. King Salman International Stadium, with 92,000 seats, is due for completion in 2029, and heavy construction equipment has already been moved onto the site. A full-scale reconstruction of King Fahd Sports City stadium has begun. In terms of the scale of work and spending on steel structures, its reconstruction differs little from a new-build project.
As part of preparations for Expo 2030, earthworks are continuing in north-west Riyadh. More than 230 giant pavilions will be built here. The total area of the exhibition site is 6 km2, and installation of building steel frames will begin in 2027. All of these facilities are guaranteed to be built. Unlike the Vision 2030 megaprojects, they are not at risk of budget sequestration.
Metro expansion will continue. The extension of the second line has moved into the tunnelling stage, with a total length of 7 km. It will link the historic Diriyah district with the future interchange station on Line 7. Five new stations will be built here. A consortium led by Italy’s Webuild won the $2.8 billion contract.
Construction of Metro Line 7 also falls into the guaranteed category. It will connect Diriyah and New Murabba with the Expo 2030 site. Its total length is 65 km, of which 47 km will be underground. In early September 2026, the Royal Commission officially approved the contract to design and build a new hub metro station directly beneath the Expo site. It will tie into the existing Line 4, which runs from the new King Salman International Airport.
These works in 2027 will require huge volumes of heavy sections: rails, beams, tunnel lining segments, as well as rebar. For the previous six lines, Hadeed supplied rebar, while steel structures came from Al Nafie Steel, Rajhi Steel and Zamil Steel. Contracts for specialised high-strength fasteners went to Britain’s SFS Group, while Germany’s Herrenknecht won the contract for tunnel boring machines. France’s Alstom and Canada’s Bombardier supplied not only trains, but also contact rails and prefabricated steel structures – elevated guideway systems.
MGS-3 moves into the stage of joining completed sections in 2027. Use of finished steel at this final stage will be minimal. But Saudi Aramco’s portfolio still includes other projects with huge steel consumption potential:
These projects are critical and not subject to revision.
Implementation of the water programme under Vision 2030 will definitely continue. Overall, by 2030 more than 11,000 km of trunk water pipelines are to be laid. In 2027, construction will begin on the additional 348-km Jubail-Buraidah II line.
By the end of 2026, Saudi Arabia will come very close to the Vision 2030 target of 70% homeownership or reach it. But that does not mean housing construction will stop in 2027. The country has one of the highest population growth rates in the region. Moreover, according to the official census, 70% are people aged under 35. The share of citizens aged under 25 is 37%.
This is a huge source of potential demand for new housing from young families. In addition, the number of foreign workers and engineers in the country is steadily rising, and they also need somewhere to live. To meet their needs, the government is expanding the construction of purpose-built rental housing under the Build-to-Rent program.
Given these factors, Saudi Arabia’s demand for finished steel is expected to decline further to 11.5–12 million tonnes in 2027.
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