Steel demand booming in Persian Gulf

The high price of oil during the last 2-3 years has resulted in the accumulation of substantial financial deposits in the Persian Gulf countries. In turn, this has provided the spark for many construction and industrial projects in recent years in those countries. The Arab countries of the Persian Gulf region alone imported about 15 million tons of steel in 2005, and their demand for steel continues to climb at a rate of more than 15 percent per annum. Such a demand trend cannot be met by a domestic or even regional supply of steel and so there is no other option but to import from further a field. To facilitate construction projects and to control the high price of steel, the governments in some Persian Gulf countries such as Iran and Qatar, have decided to cancel custom duties for some types of construction steel, such as I-beams, H-beam and debar. When we look specifically at Iran, we see that the country has taken steps to meet its own rising domestic demand along with the very high demand of its neighboring Persian Gulf countries. The Iranian government has already set itself the target of reaching 29 million tons of steel production by the end of the Fourth Socio-Economic Plan (2010). This would represent a major step up from existing production which does not exceed 10 million tons per annum. In other words, steel production will be multiplied by three within the coming four years in Iran, if all goes according to plan. In addition, the new Iranian government has launched a lot of development projects since their accession to power last year. Meanwhile, other Persian Gulf countries have very large construction and industrial projects underway which necessitate great quantities of steel. As a result, a small country such as the UAE, for example, has an annual demand for steel of 2 million tons. On the other hand, the reconstruction of Iraq and Afghanistan will also build up two other developing markets for steel in this region. Nowadays, most of the demand in the region is supplied by Turkey, the CIS and China. However, high quality products and easy access to regional markets are two main advantages for Iranian steelmakers. They will be in poll position to occupy the region's markets if Iran reaches its target of 29 million tons of annual steel production by 2010.