The steel industry in the Gulf Co-operation Council (GCC) region remains imbalanced as most of the capacity is shifted to longs productions with flats production remaining relatively underdeveloped. Such a state of affairs is considered to be one of the current main points of weakness in the industry overall, as was discussed at The First Saudi International Iron & Steel Conference held in Riyadh.
The steel industry in the GCC, being longs product-oriented, has been suffering from the imbalance in question. According to steel market players, up to 85-90 percent of the steel production in the region is used in construction, making producers highly dependent on local project activity.
In particular, average rebar consumption in the UAE has dropped to around 200,000-250,000 mt versus around 300,000 mt last year. Some concerns are in place regarding the post Expo 2020 period; however, local steel producers are confident that government support will create some project demand. The construction segment in Saudi Arabia, on the contrary, is expected to gradually recover with 17 projects worth at least $4 billion each being currently on the table. However, sources admit that this is a rather long-term perspective.
Market players stressed that the region has the potential to expand into the flats segment as currently around 2 million mt per year is being imported. “There is sizeable import volume, but to be fair most of these products are not produced internally or the output is not sufficient,” a source said. In particular, in Saudi Arabia there is a need for thin gauge flat materials as well as for steel plate. However, it was stressed that the GCC region needs a sufficiently developed manufacturing industry in order to enhance the investments into the flats side of the business.