What should be done to develop a sustainable steel industry in the Middle East?

Wednesday, 09 April 2008 14:33:44 (GMT+3)   |  
       

Speaking at the SteelOrbis Spring 08 Conference and 58th IREPAS Meeting held in Istanbul, Sudershan Singh, Technical Director of Al-Tuwairqi Group of Companies, touched on developments in and challenges facing the global steel industry; these included the rise of almost US$375/mt in steel prices during the past four months, the big challenge of inflation control facing the governments of developing countries, oil prices which have crossed the mark of US$100 per barrel, the continued growth in world steel production and consumption, the slowdown of the US economy and the declining dollar, and the 80-100 percent increase in raw material prices.

The effects of the abovementioned factors on Middle East steel are as follows:

Some projects have slowed down, and steel producers have initiated upstream expansion programs. The slow down of the US economy could effect the economies of Eastern Europe, and parts of the Americas and Asia. The economies of the Middle East, India and China are expected to be the least effected. There will be almost no effect on the steel industry worldwide as the US contributes only eight percent of total world production. The economic slowdown in the US along with the declining dollar which has resulted in a high inflation rate will not have any serious effect on the overall world economy as the strong economies of China, India, the Middle East, Brazil and Russia will almost completely counter any negative impact.

Mr. Singh added that there are some necessary steps which should taken to counteract the negative impacts of the abovementioned factors. These include investment in the mining sector to securing raw materials, investment in shipping, logistics and in local transport by rail/road, the introduction of cost control measures aimed at low-cost production, the implementation of measures to keep inflation under control.

For the development of a sustainable steel industry in the Middle East region, necessary steps include consolidation, improvement of technology, the provision of necessary funding to support upstream investments, the production of high-end grade steels to reduce imports, and the alignment of regional capacity and demand.

There are some benefits in the formation of alliances by producers: smaller risks, lower operational costs, improved quality, access to bigger markets and tax savings. Benefits for the consumers include price stability, improved product quality and timely delivery.

Al-Tuwairqi Group of Companies has production facilities in the Middle East and the UK, with active projects in the UAE, Bahrain, Egypt and Pakistan. The group plans to achieve crude steel production of six million tons per year by 2011. Al-Tuwairqi Group announced at the Arab Steel Conference held in March 2008 the formation of the Arab Steel Company to produce 30 million tons per year of liquid steel in six companies with capacities of five million tons each. These companies will be located at suitable locations in the MENA region. This announcement is in line with the vision of Al-Tuwairqi Group to form alliances for a healthy and sustainable future steel industry. Major steel producers in the region have been invited to participate in this mission.


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