Steelmakers expect higher costs from revised electricity tariffs

Saudi steelmakers Watani Iron Steel Co. and Ajeej Steel & Manufacturing Co. expect higher operating costs following revised electricity tariffs scheduled to take effect on January 1, 2027. Changes to water tariffs are not expected to have a material financial impact.

The revised industrial electricity tariff, effective January 1, 2027, will rise by 15pct to SAR 0.23 per kWh from SAR 0.20 per kWh for users connected to the electricity transmission or distribution network. Fixed monthly charges will also vary according to circuit breaker capacity and customer category.

Watani Iron Steel expects the new electricity tariffs to increase its total cost of sales by 1.12pct, based on its reviewed preliminary financial statements as of June 30. The impact is expected to take effect in the first quarter of fiscal 2027.

Ajeej Steel, a subsidiary of National Building & Marketing Co., expects its energy costs to rise by approximately SAR 3.5 mln (USD 933,000) from 2027.

As reported earlier, Riyadh Steel Co. also expects higher costs, estimating an increase of SAR 1.365 mln (USD 364,000) in annual energy expenses in 2027.

The companies said they were assessing measures to limit the impact of higher energy costs, including improving operational efficiency and optimizing energy consumption.

1 USD / 3.75 SAR