KSA Ferro Silicon Market Outlook to 2028

KSA Ferro Silicon Market Overview

The Ferro Silicon market in the Kingdom of Saudi Arabia (KSA) was valued at USD 58 million in 2023. This growth is primarily driven by the increasing demand for steel and cast iron in various industries, such as construction and automotive. Ferro Silicon is a crucial deoxidizer and alloying element.

The major players in the KSA Ferro Silicon market include Gulf Ferro Alloys Company and Saudi Iron & Steel Company, which have established themselves as leaders through extensive production capacities and technological advancements. These companies are crucial in meeting both domestic and export demands.

In early 2024, Gulf Ferro Alloys Company announced the expansion of their production capacity by 20%, aiming to meet the rising domestic demand and explore new export opportunities. This development is substantial as it aligns with the national strategy of increasing non-oil exports, contributing to economic diversification.

The city of Al-Jubail is the dominant player in the Ferro Silicon market, capturing the largest market share in 2023. This dominance is due to the region's proximity to key raw materials and well-established industrial infrastructure.

KSA Ferro Silicon Market Segmentation

KSA's Ferro Silicon market is segmented into product type, application, and region.

By Product Type: The KSA ferrosilicon market is also segmented by product type into ferrosilicon 75%, Ferrosilicon 50%, and Ferrosilicon 90%. In 2023, Ferrosilicon 75% held a dominant market share due to its widespread application in steel manufacturing and foundries. The high silicon content and efficient deoxidizing properties make it a preferred choice for enhancing the quality of steel and cast iron products.

By Application: The KSA Ferro Silicon market is segmented by application into Steel Manufacturing, Cast Iron Production, and Others (e.g., Magnesium Production). In 2023, Steel Manufacturing accounted for the largest market share. The robust growth of the construction and automotive sectors has led to an increased demand for high-quality steel, driving the consumption of Ferro Silicon in steel manufacturing processes.

By Region: The market is segmented by region into North, South, East, and West. In 2023, the Eastern region including Al-Jubail, holds the largest market share due to its strategic industrial base and access to raw materials. This region's dominance is further supported by the presence of key players and advanced manufacturing facilities.

KSA Ferro Silicon Market Competitive Landscape

Company

Establishment Year

Headquarters

Gulf Ferro Alloys Company

1992

Jubail, KSA

Saudi Iron & Steel Company

1979

Jubail, KSA

Ferroglobe

2015

London, UK

Bharat Engineering Works

1985

Dammam, KSA

Ma’aden Aluminium Company

2007

Riyadh, KSA

Saudi Iron & Steel Company: In 2023, Saudi Iron & Steel Company entered into a collaboration with a European technology firm to develop a more efficient production process for Ferro Silicon, which is expected to reduce energy consumption by 10%. This partnership aims to enhance operational efficiency and sustainability, positioning the company as a leader in adopting innovative technologies.

Bharat Engineering Works: Bharat Engineering Works invested SAR 100 million in 2023 to upgrade its facilities with cleaner technologies, aiming to comply with stringent environmental regulations and reduce carbon emissions. This investment underscores the company's commitment to sustainability and regulatory compliance, enhancing its competitive position in the market.

KSA Ferro Silicon Market Analysis

KSA Ferro Silicon Market Growth Drivers:

Rising Steel Production Demand: The demand for Ferro Silicon in KSA is driven by the increasing steel production. In 2023, the total crude steel production in KSA was reported at 8.6 million metric tons, up from 7.8 million metric tons in 2022. This growth is spurred by significant infrastructure projects such as NEOM and the Red Sea Project, which require substantial amounts of steel.

Automotive Industry Expansion: The automotive industry in KSA has seen a significant rebound post-pandemic, with the total vehicle production reaching 150,000 units in 2023, up from 130,000 units in 2022. This sector's growth directly impacts the demand for Ferro Silicon, as it is used in manufacturing high-strength, lightweight automotive parts.

Construction Boom: In 2023, the value of construction contracts awarded was estimated at SAR 200 billion, compared to SAR 180 billion in 2022. The Ministry of Housing anticipates that the value of construction contracts will rise to SAR 220 billion in 2024, thereby increasing the steel demand and consequently Ferro Silicon, which is essential in the construction of durable and robust structures.

KSA Ferro Silicon Market Challenges:

Fluctuating Raw Material Prices: The prices of key raw materials such as quartz and coal have seen significant fluctuations, impacting the cost of Ferro Silicon production. In 2023, the average price of high-grade quartz increased from SAR 300 per ton in 2022 to SAR 350 per ton, while coal prices rose from SAR 200 per ton to SAR 240 per ton. The volatility in raw material costs poses a challenge for producers to maintain stable pricing, with the Saudi Arabian General Investment Authority (SAGIA) predicting continued price volatility in 2024.

Energy Costs: In 2023, the average industrial electricity tariff increased from SAR 0.18 per k Wh in 2022 to SAR 0.20 per k Wh, adding to the overall production costs. The Saudi Electricity Company anticipates that electricity tariffs will further rise to SAR 0.22 per k Wh in 2024, increasing the operational expenses for Ferro Silicon manufacturers and impacting their profit margins.

KSA Ferro Silicon Market Government Initiatives:

National Industrial Development and Logistics Program (NIDLP): Launched in 2019, the NIDLP aims to transform KSA into a global industrial and logistics hub, targeting SAR 1.7 trillion in investments. The program focuses on enhancing steel production, which supports Ferro Silicon demand, with significant funding for infrastructure improvements.

Vision 2030 Infrastructure Projects: In 2023, SAR 100 billion was invested in these projects, with projections by the Ministry of Finance indicating that an additional SAR 120 billion will be allocated in 2024. Vision 2030 has prioritized large-scale infrastructure projects, including the NEOM city and the Red Sea Project, with an estimated total investment of SAR 500 billion. These investments fuel the demand for construction materials, including Ferro Silicon, essential for steel production in these projects.

KSA Ferro Silicon Future Market Outlook

KSA's Ferro Silicon market is expected to grow in the coming years. The market is also likely to shift towards more organized with established players and online platforms expanding their reach.

KSA Ferro Silicon Future Market Trends

Increasing Demand for Ferro Silicon in High-Strength Steel Production: Over the next five years, the demand for Ferro Silicon in high-strength steel production is expected to rise significantly. By 2028, the production of high-strength steel in KSA is projected to reach 12 million metric tons, driven by advancements in the automotive and construction sectors. This increase will necessitate higher volumes of Ferro Silicon, supporting its market growth.

Expansion of Export Markets: With the support of Vision 2030 and the NIDLP, KSA aims to expand its Ferro Silicon export markets. By 2028, KSA's Ferro Silicon exports are expected to reach 500,000 metric tons annually, up from 350,000 metric tons in 2023. This expansion will be facilitated by enhanced production capacities and competitive pricing, positioning KSA as a leading Ferro Silicon exporter globally.
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