meed-logo

line1 line2 line3
SIGN IN / REGISTER

Gulf contractors face post-war materials squeeze

28 April 2026

Register for MEED’s 14-day trial access 

Despite the tenuous ceasefire and efforts toward a political resolution, the Gulf’s construction materials supply chain is absorbing impacts that will not be quickly mitigated and are likely to be felt for many months.

Insurance premiums can normalise within weeks on restored confidence; commodity prices, port backlogs and depleted diesel inventories will not.

The GCC has $943bn in projects currently under execution, according to MEED Projects – more than half of it awarded in the past two years. That book now faces cost pressures that fixed-price contracts were not written to absorb.

A further $321bn sits at the bidding stage, where submitted prices face scrutiny against a drastically altered set of input costs.

Steel price divergence

GCC crude steel output reached a record 21.64 million tonnes in 2025 – up 9.5% year-on-year – with Saudi Arabia alone producing 10.78 million tonnes, a 12.3% increase, according to the Arab Iron and Steel Union.

The conflict has halted that trajectory as Gulf steelmakers have seen their seaborne supply of iron ore pellets to feed their direct-reduced iron (DRI) plants cut off. This has forced a fallback to ferrous scrap and in turn created a secondary squeeze.

Saudi Arabia’s four electric arc furnace steelmakers typically rely on DRI for 80-85% of their raw material, so a turn to scrap at scale would rapidly exhaust domestic supply.

Saudi steel prices have swiftly risen as a result. Fastmarkets’ weekly assessment for rebar delivered into Saudi Arabia stood at SR2,300-2,460 ($612-655) per tonne on 7 April, up roughly 9% on the midpoint from the pre-conflict level of 23 February.

The price rally has extended through April, with Saudi Iron & Steel Company (Hadeed) raising long-product prices for the fourth time since early April – the latest a SR160 increase to SR2,800 per tonne for 12-32mm rebar.

Pricing is nevertheless diverging across the region. Emirates Steel held its May rebar price unchanged at AED2,721 ($741) per tonne ex-works, citing market stability as the priority despite rising cost pressures from the regional disruption.

The rollover discipline outside Saudi Arabia may partly reflect other Gulf countries’ political and industrial leadership exerting pressure to maintain market confidence during an abnormal period, rather than an accurate read of underlying cost pressures.

Invariably, the DRI feedstock squeeze, elevated freight and higher energy input costs sit on every mill in the region, not just Saudi Arabia’s.

When a geographical market as large as the kingdom exhausts both primary input supply and scrap, it is bound to affect the entire region-wide sector sooner or later.

Held list prices can mask cost accumulation for a while, but delayed passthrough will not change the underlying fundamentals.

Aluminium constraints

In addition to the impacts on the steel sector, the physical damage to Gulf aluminium production was one of the largest shocks to the GCC’s industrial base during the hot period of the Iran conflict.

It will take up to 12 months for Emirates Global Aluminium (EGA) to repair the damage sustained by its Al-Taweelah complex in Abu Dhabi on 28 March. Aluminium Bahrain (Alba) was also hit the same day, and both producers have declared force majeure.

GCC daily aluminium production was down roughly 6% month-on-month in March, according to the International Aluminium Institute – despite that period incorporating only three days of disruption following the 28 March strikes. April will be worse.

The region’s total Q1 aluminium output declined to its lowest point in four years.

London-based commodities firm CRU Group now estimates curtailment at Al-Taweelah alone could remove up to 1.2 million tonnes from 2026 production, while JP Morgan has projected a 1.9 million tonne global deficit for 2026 – the largest since 2000.

Prices have moved accordingly. The aluminium three-month benchmark at the London Metal Exchange (LME) climbed from around $3,100 per tonne at end-February to a peak of $3,670 on 16 April – a three-year high – before easing to around $3,540 with the ceasefire. CRU has modelled a path to $4,000 per tonne under prolonged disruption, while BMI, the research arm of Fitch Group, has given a $3,700 price target.

For regional contractors, this premium could begin to hit hard. Gulf producers have historically supplied GCC construction at a discount to imported metal, reflecting low-cost gas feedstock, proximity and short logistics chains.

With production curtailed at Taweelah, Alba and Qatalum – and Hormuz shipping constrained – that discount has collapsed. Contractors now face LME-plus-import-premium pricing from further afield for the bulk of their aluminium requirement through 2026 – on tenders that were quoted on the Gulf-premium assumption.

Freight, fuel and other inputs

Imported inputs into GCC construction range from specialist steel and electromechanical components to cladding systems and project equipment.

Lloyd’s List Intelligence recorded around 80 vessel transits through the Strait of Hormuz in the week of 13-19 April, against pre-war traffic of 130 or more transits per day.

Kpler has forecast a ceiling of 10-15 daily passages even if the ceasefire holds, leaving project supplies caught up in the disruption. Construction-bound freight will likely not be a priority when transit resumes, however, and premium pricing will still apply.

The UAE east-coast ports are absorbing part of the diverted flow, but Khor Fakkan can only partially compensate, with throughput capped at around 3,000 TEU; Jeddah, the primary contingency hub, has dwell times of 10-12 days.

Imported construction supply chain inputs are already showing the squeeze: for instance, a flow of around 40,000 tonnes of copper cathode bound each month for GCC wire rod producers has been halted, according to Fastmarkets.

Then there is the matter of fuel. Diesel is a direct contractor operating cost, running through site generators, plant, trucking and logistics.

The latter is particularly key. For low-value, high-weight inputs such as cement and aggregate, rising diesel pricing compounds through the supply chain.

Diesel in the UAE tracks international benchmarks monthly and rose to AED4.69 per litre in April, up 72% month-on-month, with Brent having moved from around $65 pre-conflict to a $103 March average. Saudi diesel also follows wholesale references.

Cement as an outlier

Cement is the one base construction input where the conflict has not yet produced a clear contractor-facing cost pressure.

In Saudi Arabia, domestic dispatches fell 5.6% year-on-year in March, reflecting the Ramadan timing and a broader construction-sector softening. Total March sales were down 6.7% year-on-year and 21.3% month-on-month, according to Al-Rajhi Capital.

Saudi cement is largely domestically produced; the sector is not raw-material-constrained. Utilisation rates at Saudi plants dropped in March to 67.4% against a 73-74% sector run rate through most of 2025. Prices have not moved, according to Saudi Arabia’s General Authority for Statistics.

If construction demand increases and energy costs settle at a higher regional baseline, cement producers will reprice – but the trigger will be recovery, not conflict.

Repricing expectations

The space to watch is the $321bn of GCC work at the bidding stage, where pricing structures based on pre-28 February assumptions now face a different cost reality.

Some bids could be repriced, some withdrawn; others will be awarded at margins that no longer cover the input environment that awarded contracts are already absorbing.

As in previous periods of market stress, many Middle East-based contractors will likely accept low or negative margin work if only to maintain their operational cashflow. For contractors already in distress, the margin adjustments could prove tricky to absorb.

In the book already under execution, the gap between committed pricing and current input costs could surface in the coming period as contract renegotiations and programme slippage.

Steel and aluminium will lead. Diesel will run through every line. War risk insurance will ease faster than any of these on confidence restoration – assuming that the political picture stabilises – but that may become the least of contractors’ worries.

Nor is a near-term resolution even remotely guaranteed. The US’ 13 April naval blockade has only compounded Iran’s closure of the Strait of Hormuz, and every day that logistics in the waterway remains stagnant is another day of pressure on supply chains.

The materials squeeze is not two months old and contained; it is compounding.

https://image.digitalinsightresearch.in/uploads/NewsArticle/16592059/main.gif
John Bambridge

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Algeria extends bid deadline for stalled power plant

    30 April 2026

    Algeria’s state-owned electricity and gas utility Sonelgaz has extended a deadline for contractors to submit expressions of interest for the construction of the 1.2GW Djelfa combined-cycle power plant.

    The project is being procured through Sonelgaz’s power generation subsidiary, Societe Algerienne de l’Electricite et du Gaz – Production de l’Electricite (SPE).

    In March, MEED reported that the utility was seeking contractors to complete works at the existing Djelfa plant, including the remaining construction, the supply of missing equipment and the assessment of installed equipment.

    The original bid submission deadline for prequalification was 7 April. The new deadline is 5 May.

    The tender is open to both local and international companies, and will be conducted in three phases: prequalification, preliminary technical assessment, and final technical and financial submission.

    The retender follows earlier plans to complete the project through a Chinese consortium comprising China Energy Engineering Group Company, Northwest Electric Power Design Institute and Anhui Electric Power Construction Company.

    This proposal was made after Spanish contractor Duro Felguera halted work on the project in June 2024. 

    According to MEED Projects, construction works had progressed to 72% at the time of the suspension.

    It is understood that an agreement in principle was then reached to transfer the remaining works to the Chinese group after the Spanish firm entered a pre-bankruptcy phase in December 2024.

    A company statement at the time said: “The Chinese group is committed to completing the plant construction, with commissioning scheduled to start in the ninth month following the final agreement.”

    However, in October 2025, it was revealed that the attempt to transfer the project to a consortium of Chinese companies had failed, leaving the Spanish firm with an official demand to pay €413m in compensation to Sonelgaz.

    This was revealed via a lengthy report containing a restructuring plan sent by Duro Felguera to creditors in Spain and the Madrid Financial Markets Authority.

    Gas-fired power plants

    Located in Djelfa province, the project remains a key part of Algeria’s power generation expansion plans.

    Sonelgaz has been seeking contractors to build a separate 1.2GW combined-cycle gas-fired power plant in Aldrar since last April.

    The most recent deadline extension was 29 April.

    According to recent reports, Algeria has also begun construction of a power generation plant in El-Aouinet, with a total installed capacity of 1,406MW.

    The combined-cycle gas turbine plant is being developed in partnership with China National Electric Engineering Company.

    Gas-fired combined-cycle plants continue to account for the majority of Algeria’s electricity generation capacity. Data from MEED Projects indicates that more than 5,000MW of oil- and gas-fired power capacity is currently in the execution phase.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16623787/main.jpg
    Mark Dowdall
  • Dewa announces new record for power reliability

    30 April 2026

    Dubai Electricity & Water Authority (Dewa) has announced that it set a new world record for the lowest electricity customer minutes lost (CML), at 0.82 minutes a year in 2025.

    The figure is equivalent to about 49 seconds of annual outage per customer. It improves on the utility’s previous record of 0.94 minutes in 2024, a reduction of around 13%.

    Dewa said it has reduced CML in Dubai from 6.88 minutes a year in 2012 to 0.82 minutes in 2025, significantly lower than the average of about 15 minutes recorded by leading electricity utilities in the European Union.

    The smart grid is a central component of Dewa’s strategy to improve reliability and efficiency. The programme is being implemented with total investments of AED7bn up to 2035.

    One of the key initiatives of the programme is the Automatic Smart Grid Restoration System, which enables remote, round-the-clock control and monitoring.

    Dewa currently has tenders out for several power and water infrastructure projects in the emirate. These include at least four Glass Reinforced Epoxy (GRE) water transmission pipeline projects.

    According to regional projects tracker MEED Projects, Dewa awarded $1.1bn-worth of new power and water contracts in 2025. Contract awards had previously reached $2.6bn in 2024, and $4bn in 2024.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16623721/main.jpg
    Mark Dowdall
  • Riyadh tenders PMC deal for major sports arena

    30 April 2026

     

    Saudi Arabia’s Sports Boulevard Foundation has tendered a contract inviting firms to bid for project management consultancy (PMC) services for the Global Sports Tower in the Athletics District of the Sports Boulevard development in Riyadh.

    The tender was issued on 8 April, with a bid submission deadline of 10 May.

    The 130-metre-tall Global Sports Tower will cover an area of 84,000 square metres and will include more than 30 sports facilities. The tower will feature the world’s tallest indoor climbing wall at 98 metres and a 250-metre running track.

    Earlier this week, MEED reported that the Sports Boulevard Foundation is preparing to award the main construction contract for the Global Sports Tower. MEED understands that bid evaluation has reached an advanced stage and the contract is likely to be awarded by the end of May.

    MEED reported in May last year that design work on the tower had been completed. Saudi Arabia’s Crown Prince Mohammed Bin Salman Bin Abdulaziz Al-Saud approved the designs in 2024.

    The Sports Boulevard development runs across Riyadh from east to west and, once complete, is set to be the world’s longest park spanning more than 135 kilometres.

    The development will be spread across several districts, including Wadi Hanifah, Arts, Urban Wadi, Entertainment, Athletics and Eco, as well as Sands Sports Park.

    The large-scale project aims to transform central Riyadh – currently dominated by major highways – into a recreational corridor.

    Sports Boulevard, which will feature 4.4 million sq m of public realm and landmark buildings, will also be home to the Centre for Cinematic Arts and a 2,000-seat amphitheatre.

    The development will provide more than 2.3 million sq m of mixed-use commercial, residential, and retail assets, along with sports facilities around the park, known as Linear Park.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16622287/main.jpeg
    Yasir Iqbal
  • Contractors submit Saudi Arabia phosphate rail track bids

    30 April 2026

     

    Saudi Arabian Railways (SAR) received bids from contractors on 27 April for a multibillion-riyal tender to double the tracks on the existing phosphate transport railway network connecting the Waad Al-Shamal mines to Ras Al-Khair in the kingdom’s Eastern Province.

    The tender – covering the second section of the track-doubling works and spanning more than 150 kilometres (km) – was issued on 9 February.

    This follows SAR receiving bids on 1 February for the project’s first phase, which spans about 100km from the AZ1/Nariyah Yard to Ras Al-Khair.

    The scope includes track doubling, alignment modifications, new utility bridges, culvert widening and hydrological structures, as well as the conversion of the AZ1 siding into a mainline track. It also includes support for signalling and telecommunications systems.

    The tender notice was issued in late November.

    Switzerland-based engineering firm ARX is the project consultant.

    MEED understands that these two packages are the first of four that SAR is expected to tender for the phosphate railway line. Other packages anticipated to be tendered shortly include the depot and systems packages.

    In 2023, MEED reported that SAR was planning two projects to increase its freight capacity, including an estimated SR4.2bn ($1.1bn) project to install a second track along the North Train Freight Line and construct three new freight yards.

    Formerly known as the North-South Railway, the North Train is a 1,550km-long freight line running from the phosphate and bauxite mines in the far north of the kingdom to the Al-Baithah junction. There, it diverges into a line southward to Riyadh and a second line running east to downstream fertiliser production and alumina refining facilities at Ras Al-Khair on the Gulf coast.

    Adding a second track and the freight yards will significantly increase the network’s cargo-carrying capacity and facilitate increased industrial production. Project implementation is expected to take four years.

    State-owned SAR is also considering increasing the localisation of railway materials and equipment, including the construction of a cement sleeper manufacturing facility.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16622526/main.jpg
    Yasir Iqbal
  • Iraq sets up commission for $5bn pipeline project

    30 April 2026

    Iraq is setting up a high-level commission to oversee the development of the planned $5bn Basra-Haditha crude oil pipeline project.

    The decision was made at a meeting held on 26 April, attended by Prime Minister Mohammed Shia Al-Sudani and the Minister of Petroleum Hayyan Abdul Ghani Al-Sawad, as well as other officials and consultants.

    The commission will be chaired by the undersecretary of the Oil Ministry and include advisers to the prime minister, along with director-generals from the Oil Ministry and the Industry & Minerals Ministry.

    Al-Sudani said the pipeline project will increase flexibility in transporting crude oil to the Turkish port of Ceyhan, as well as the Syrian port of Baniyas and Jordan’s port of Aqaba.

    The pipeline is also expected to strengthen supply to refineries in central and northern Iraq and support higher domestic refining output.

    The meeting also approved allocating $1.5bn to the project this year, with funding provided through the Iraq-China oil-for-infrastructure mechanism, according to a statement issued by the Petroleum Ministry.

    Earlier this month, Iraq’s Council of Ministers approved amendments allowing the Oil Ministry to directly invite specialised companies to bid for the 685-kilometre pipeline.

    The pipeline is expected to have a capacity of up to 2.25 million barrels a day.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16621546/main.jpg
    Wil Crisp