Dubai: A construction boom in Saudi Arabia and fellow Gulf countries helped boost the kingdom's scrap iron prices in January, traders said.
Scrap iron hit around $350 a tonne last week after having fetched about $300 in late November, traders said.
"There is huge demand from the construction industry here and scrap hunters either in Saudi Arabia or other countries in the region are paying almost 70 per cent more than what they used to pay in January 2007," one Dubai-based steel trader said.
"I would not be surprised if prices reach $400 a tonne within the next couple of months."
Demand for iron and steel products in the world's biggest oil exporting region, where more than $1 trillion of infrastructure projects are in the pipeline, could climb 31 per cent to 19.7 million tonnes by 2008, according to the Gulf Organisation for Industrial Consulting.
"The market here saw a rise of more than 10 per cent in just a few weeks, but other countries in the region are facing the same situation, particularly the UAE," a Saudi-based scrap metal dealer said.
Consultancy EC Harris has said that costs in the UAE, a centre of the regional construction boom, could jump by a fifth next year on higher material and labour costs. Cost of materials such as cement and steel could rise 19 per cent during the next 12 months, it added.
The scrap metal market is estimated at up to three million tonnes per year in the kingdom. About 20 per cent of Saudi Arabia's scrap metal is recycled domestically to produce steel, while the rest is exported mainly to China, India and some Gulf countries.
