In his presentation during the SteelOrbis 2011 Fall Conferance & 65th IREPAS Meeting, Abdülaziz Hashim, head of market research at Qatar Steel Company (QSC), stated that the Gulf Cooperation Council (GCC) states, which include Saudi Arabia, Qatar, UAE, Oman, Bahrain and Kuwait, have seen a strong recovery following the economic crisis, led by Qatar and Saudi Arabia. Mr. Hashim added that strong economic growth driving massive investments in construction projects is pushing up steel demand in the region. According to the World Bank, the annual GDP growth of GCC countries was 4.2 percent in 2010 and 5.2 percent in 2011.
Mr. Hashim also stated that strong crude oil prices are also very supportive of investments in the region as actual oil prices are much higher than in budget assumptions and so will ensure a surplus for re-investment and, with oil prices are expected to maintain their high levels in the short term, i.e. at $100/bbl for 2011-2014, construction investments will also remain high, thereby keeping steel demand up in GCC countries.
The growing young population in the region is another strong fundamental for steel-related investments, with needs for investments in housing, infrastructure and industrial investments for employment. In the GCC, ongoing or planned construction project contracts worth US$ 1.8 trillion will contribute to rebar demand with an average growth rate of 5-7 percent in the coming years, as Mr. Hashim said. Especially Qatar, which will host World Cup 2022, has projects worth US$65 billion for infrastructure development. This country also has a gross domestic investment plan during 2011-2016 worth $226 billon. In Saudi Arabia, on the other hand, with the country's ninth five-year plan for 2010-2014, the planned investments in the country are expected to create 1.1 million job opportunities, Mr. Hashim stated. However, governments' investment plans in GCC countries also entail some risks such as the political unrest in the Middle East and the weak situation of the global economy.
Mr. Hashim said that re-rollers in the region have suffered from high operating costs while EAF mini-mills and integrated mills have expanded strongly. With the billet shortage in the region, re-rollers have been severely affected. Hence, re-rollers have integrated upwards and existing EAF mills/integrated mills have raised their melting capacity. Strong steel demand has prompted greenfield and brownfield investments and rebar production has strongly increased. High demand for steel has prompted more capacity expansions from GCC mills and this development reduces the import share in the GCC market, the QSC official said. The existing local re-rollers in particular have also started to integrate upwards to reduce dependence on imported billets by adding EAF capacities. Rising EAF capacities have increased scrap and DRI/HBI demand in the region and so the GCC has become a net scrap importer, Mr. Hashim concluded.