Local producers blamed for ‘unjustified’ hike in steel prices

AMMAN — Steel prices have gone up by almost 25 per cent about over the past weeks despite a drop in demand by developers, with informed sources blaming the “unjustified” increase on “cartel activities” by local producers.

This steep rise threatens to drive construction and real estate prices to new highs, sources contacted by The Jordan Times on Tuesday warned.

The sources said the Ministry of Industry, Trade and Supply seems to be confused whether to take action or not, citing a statement by the ministry on Monday which said it would open the door for importing steel due to rising prices. But the ministry then backed off on the same day, asking media outlets to cancel or not publish the statement.  

The ministry went back on its decision because of pressure by producers, said the sources, who include a government official.

Steel prices over the past weeks went up from around JD375 a tonne to nearly JD475 per tonne. 

On Monday, the ministry said that it would allow imports of steel into the domestic market without any restrictions on quantities, as previously it used to restrict the quantity of steel imports to 3,000 tonnes per month.

The intended decision, it said, is aimed at boosting competition in the domestic market. 

The statement, which quoted Minister of Industry, Trade and Supply Maha Ali, said prices in the local market were going up despite the decline in production costs and heavy fuel prices.

On Tuesday, Ali met with the Jordan Chamber of Industry and said that steel prices went up by JD100 a tonne over the past weeks, describing the hike as unjustified, according to the Jordan News Agency, Petra. 

Petra quoted the minister as saying that the ministry is currently in talks with industrialists to review the prices and production costs, and that it would take a decision related to allowing imports and their quantities accordingly. 

“Steel factories in Jordan are owned by influential people. Sometimes they practice pressure on decision makers,” said the official, who requested anonymity. 

Another source said that factories are cartelising in order to protect their margins, although demand for the product is weaker than what it used to be a year ago. 

Jordan Housing Developers Association President Fawaz Al Hassan told The Jordan Times that home builders are the biggest consumer of steel in Jordan, and the sector has seen a 15 per cent decline in activity.

“Steel factories in Jordan are owned by influential people, and the government cannot take a decision that may hurt their interests,” Hassan charged.

Replying to accusations, Ministry of Industry and Trade Spokesperson Yanal Barmawi said his ministry will take a decision to try to reverse the rise soon if the trend continues upwards.

He noted that the ministry will not relent under any pressure by any interest group.

Al Rai daily columnist Issam Qadamani wrote an article on what is going on in the steel market in Jordan, noting that there is a monopoly among distributors whom he accused of buying all the production of local manufacturers and raising the prices.

He told The Jordan Times that two major steel traders bought all local production and decided to raise prices by JD100.

The economist said the manufacturers pressured the minister into going back on the decision to allow unhindered imports. 

Qadamani said the government, a major consumer of steel, has not been floating new tenders, as it is struggling to pay delayed financial dues for contractors. 

The columnist accused steel factories of cartelising to raise prices in order to offset losses registered in previous years, calling on the government to open the import door to boost competition and bring prices down. 

There are around 12 steel factories in Jordan. 

The Jordan Times tried several times to contact the steel traders society or owners of steel factories to comment on the issue but to no avail.