JEDDAH: Saudi Arabia's domestic steel production will grow at a CAGR of around 14 percent to 2013 on the back of rising steel demand, RNCOS said in its "Saudi Arabia Steel Industry Forecast to 2013". The report provides a detailed study of the steel industry outlook in Saudi Arabia till 2015. The report noted that the consumption of steel is anticipated to gain an uninterrupted momentum from the government backed massive infrastructure projects. An estimated $400 billion investment will be spent on large infrastructure projects during the next five years, government sources said. This will further boost the steel demand in the country and take iron and steel consumption to over 26 million metric tons by 2015. The Kingdom has shown strong resilience against the economic slowdown, the report said. As a result, Saudi Arabia's steel industry is once again striving hard to achieve exponential growth trajectory and many steel manufacturers have started formulating capacity expansion strategies in response to the fast growing domestic demand. Saudi Arabia is one of the most attractive destinations for the global crude steel producers, it added. There are several reasons that prompt investors to capture the market, such as its geographical location equidistant from Africa, Europe, and Asian countries, cheaper availability of labor compared to Europe and America, and cheap & reliable energy & gas resources. Furthermore, steel consumption in the Kingdom has been continuously soaring on the back of fast growing real estate and construction industry. Several infrastructure projects initiated during the past decade have boosted the steel demand in the country. Moreover, consumption of steel is anticipated to gain an uninterrupted momentum from the government backed massive infrastructure projects. Saudi Arabia, the second largest sector in terms of iron and primary steel production capacity and the largest in terms of infrastructure spending, has led to the transformation in the GCC infrastructure scenario in recent years with plans to develop six economic cities and other major development schemes. Besides, the Kingdom has initiated massive large-scale developments in its infrastructure, economical, industrial, and educational projects to revamp the facilities and services provided in the country to enhance business opportunities. The report noted that an analysis of the impact of economic slowdown on the real estate activities revealed that, of the total real estate projects (worth $543 billion), mere 4 percent have been cancelled or delayed. "In other words, of the total 812 projects in real estate, infrastructure, and leisure, 30 projects have been cancelled and 25 have been delayed. Besides, a significant number of projects are currently under the construction phase, of which a considerable share of entire projects costs will be spent on steel products purchases," the report noted. Meanwhile, Saudi Arabia's financial regulator has approved the initial public offering of Jubail-based Hail Cement this September, which will make the company the tenth listed supplier of the material in the Kingdom. It will issue 48.59 million shares, or 50 percent of the company, at an initial offer rate of SR 10 per share. The total offer value will be SR485.9 million and the total equity value of the shares on free-float SR979 million. The issue will open on Sept. 20 and close six days later.
