06/03/2010
Data indicate that the global world economy had improved after suffering for the last two years from the financial crisis, it will demand for many goods in which it will increase and thus the prices will rise, for example steel is one of them.
Saudi Arabia and Egypt will lead the growth of steel consumption this year in the Middle East and North Africa, as it will raise the boom in construction and costs in infrastructure demands. But it is unlikely to increase the demand in Dubai, which was once the steel main force in 2010, as banks are still reluctant to provide loans for new projects construction in Emirate which is heavily indebted and stacked steel warehouses.
In 2009, the steel demand started in North Africa, being in the safe side of the worst recession taking place in the world of steel industry worthing $ 500 billion, which took producers across the world to cut production by almost half with the demand decay.
Analysts notices that the Egyptian banks which have liquidity despite the credit crisis and the government stimulus costs programs on the infrastructure supported the continuation of construction projects, the housing shortage in the region assisted to sustain the booming demand.
George Matta, the Marketing Director of «Ezz Steel»the largest steel producer in Egypt in North Africa, said that loan is available and people are not facing any problem in fluidity access.
He said there are large infrastructure projects in Egypt due to the demand for housing and the government is spending heavily in these areas.
Analysts declares that rising demand will enable steel producers to increase the prices this year, which will reflects in Saudi Basic Industries «SABIC» and «Ordimir» Turkish Co. as well as «Ezz Steel».
Matta is expecting a growth on steel consumption between 8 and 10 percent in the Middle East and North Africa, after falling 1 percent in 2009.
Ahmed Shams, Vice President of the Shares Researches at EFG-Hermes stated that the construction market in Egypt is very strong and the demand is high... Egypt was among the top five exporters of cement and now importing due to the rising demand.
Saudi and Iraq are the potential markets in the region due to the booming spending in their infrastructure.
Emirates Steel Industries Co. based in Abu Dhabi said in a statement sent to Reuters by e-mail, that Saudi market is still the most dynamic in the region due to the demand for commercial construction, residential and industrial projects.
Adding that the Real Estate market will benefit from the large number of local people and development in addition to the many industrial projects which are government-funded
To meet the increasing demand, Saudi Arabia, the largest oil exporter in the world is expanding its domestic steel production by about 50 % at least within the next three years.
As for Iraq, which was torn apart by the war, it began to attract the foreign investors in an effort to rebuild the country.
Saud Masoud, Head of Real Estate Researches at the U. B.S in Dubai, believed that Iraq as a region has big potential for a significant growth; there are many mixed-use building, hospitals, refineries, projects planned and currently being implemented which creates a demand for construction materials.
However, the image of Dubai remains bleak due to the global economic slowdown and the problems of debt in the Dubai World Group, which delayed the potential improvement in the conditions of lending for several years.
Masoud added that activities of construction projects fell sharply ... Funding remains a big issue and I think it will remain so in the next few years. I do not think that public spending can be offset by the decline in Dubai private sector and we may be witnessing a decline in the public spending.
Several projects were canceled or postponed linked to Nakheel Co., the real estate unit of Dubai World Group after the claim announcement to defer payment of the debts.
Bhaskar Dutta, Executive Director of Al Jazeera Steel, based in the Oman, explained that: we used to export about 35 per cent of our production to Dubai in 2008, while now our import range is between 20 and 25 per cent due to the lower demand.
He added that: materials exported to Dubai are being re-exported, mostly to Iran and Iraq rather than consumed locally.
Masood from the U.B.S also said that: paradoxically, a large amount of steel stock in Dubai and many contractors are looking to liquidate this inventory by selling it outside Dubai.
A few days ago, investors expected that the coming period would witness further demand for steel in the domestic market driven by the size of development projects being implemented in the Kingdom, and the generous spending by the government on the infrastructure projects and urban economic giant. Experts have estimated the size of the projects in Saudi Arabia is currently in various industrial & oil sectors as well as economic cities nearly $ 600 billion, which gives a positive image of stable economic situation in the Kingdom.
Regarding steel prices, traders noted that it is stable and consistent over the past months, and there are sufficient quantities in the local market covering all the needs of investors on the existing projects, pointing out that the high volatility of prices witnessed in the stock markets do not find a direct response in the local market, where the national industries is depending on slowing down, to ensure continuing the high prices of steel tons before taking any such step.
