According to Gulf Cooperation Council (GCC) steel market outlook report by Banchero Costa, with governments in GCC countries encouraging heavy investment in steel capacity, demand for iron ore as a feedstock is increasing. For example, there are currently plans for two new steel mills to be built in Abu Dhabi which will reduce the country’s dependence on steel imports. However, as steel production in the GCC has increased, iron ore imports to the region have also increased.
The report says the future of iron ore in the GCC is positive as steel demand and production is expected to continue to grow.
Regarding the steel production outlook, the Banchero Costa report points out that in the past year Chinese steel exports to the GCC have picked up considerably as Chinese domestic demand has slowed down, leading producers to export their excess supply. Chinese steel exports to both Saudi Arabia and the UAE more than doubled in 2014 from 2013. GCC steel exports are for the most part intraregional. The iron ore pellets produced in Bahrain and Oman are exported to other GCC countries but are also exported internationally.
Steel producing capacity is expected to continue to grow as investments in facilities and large infrastructure projects continue to take place. The GCC is expected to remain a net steel importer until later in the decade.