Looking at the global steel consumption figures, the Middle East indicates strong demand growth compared to the general global growth rates, due to the high levels of consumption by the construction sectors in the GCC countries - thus stated Mr. Ali Hassan Al Muraikhi, Commercial Division Manager of Qatar Steel, in his presentation made today at the SteelOrbis Spring 08 Conference & 58th IREPAS Meeting held in Istanbul. Mr. Al Muraikhi also declared that finished steel product prices are expected to maintain their high levels given the high levels of demand, on top of the strong scrap and iron ore prices and the climbing freight rates.
Strong economic growth based on oil revenues is fuelling the already rapid expansion in infrastructure and construction activity in the GCC region. Real GDP growth in the region is expected to remain high, with Qatar leading the field with a projected growth rate of 14.2 percent in 2008.
The GCC is a region where robust growth in investment projects is very evident. Strong demand for housing, particularly in Saudi Arabia, is being observed. The total budgeted value of active civil construction projects in the GCC stands at $1.5 trillion.
Apart from the oil industry, the construction sector provides the main support for sustained economic growth in the GCC. Non-oil sector growth in Qatar of 10 percent is the highest among the GCC countries.
Steel consumption in the GCC is expected to reach 24.1 million mt in 2010, of which Saudi Arabia is expected to account for 11.1 million mt followed by the UAE with 9.2 million mt and Qatar with 1.6 million mt, with per capita steel consumptions of 424 kg, 1,714 kg and 1,344 kg respectively. Current average GCC per capita consumption stands at 455 kg, much higher than the average world per capita consumption of 182 kg.
In addition, rebar consumption in GCC countries accounts for six percent of total global rebar consumption of 218 million mt. The growth rate of rebar demand in the GCC is outpacing global growth, with the GCC figure for 2008 estimated at 13 percent and the global figure projected at eight percent. GCC rebar consumption is expected to reach some 14 million mt by end of the current year.
Turkey is one of the major rebar suppliers to the GCC countries. 71 percent of GCC demand is met by domestic producers with the remaining 29 percent met by imports. The upcoming investments in the UAE, Saudi Arabia and Oman are expected to improve the local supply further. Thus, by the end of 2008 GCC rebar imports are expected to drop to 24 percent from current levels.
Qatar Steel is currently working on expansion plans, as well as making investments to secure raw material supplies, and is also focusing on diversification. The company has acquired a 25 percent stake in Bahrain-based Gulf Industrial Investment Company (GIIC) - a major supplier of pellets in the Gulf region. It has also bought 49.9 percent in Guelb el Aouj iron ore mining and pelletization project in Mauritania, West Africa to ensure regular supplies of DR grade pellets. Qatar Steel also owns 8.5 percent in Sphere Investment Ltd of Australia and 25 percent of United Stainless Steel Company (USCO) in Bahrain.
Qatar Steel also has plans to raise its steel capacity to four million tons per year by 2012 with investments aimed at flat steel production.