Saudi authorities are seeking to abolish a 5 percent customs duty on steel imports to counter a deficit in domestic supply, the head of the kingdom's biggest steel producer said on Sunday.
"There is an intention to abolish the duty but it has not been enacted yet. Such decision can not be taken without consultations with other Gulf Arab countries," said Mohamed al-Mady, Chief Executive of Saudi Basic Industries Corp (SABIC).
State-controlled SABIC controls Hadeed, which covers about 62 percent of the kingdom's steel demand. SABIC is seen as the Saudi steel industry's bellwether because of its large production and its closeness to the government.
Saudi Arabia and five other Gulf Arab countries including the United Arab Emirates and Kuwait have formed a customs union which imposes a common external tariff for products imported from outside their bloc, called the Gulf Co-operation Council (GCC). A spokesman at the Saudi Commerce and Industry Ministry said on Monday that the kingdom had lifted the import duty on steel rebar to ease a shortage in the country.
The ministry denied the information on Tuesday in comments carried by Dubai-based al-Arabiya television channel. After a relative lull, steel demand began soaring in the second half of 2009 fuelled mainly by massive state spending in the world's top oil exporter on infrastructure to diversify the economy and counter the effects of the global economic downturn.
Speaking at a post-earnings press conference, Mady said Hadeed's plants were running at full steam but he suggested that other steel producers could have reduced their production.
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