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Kingdom steel output to rise 9% amid construction boom
Published in The Saudi Gazette on 16 - 02 - 2012

The Kingdom of Saudi Arabia has become one of the favorite destinations for the steel majors due to thriving construction sector, and soaring steel demand. The construction sector in the Kingdom is considered as the largest and the fastest growing market in the Gulf region, with a huge growth potential. As the appetite for steel is growing in the Kingdom, its production will also grow at a CAGR of around 9 percent during 2012-15, RNCOS said in its “Saudi Arabia Steel Industry Forecast to 2013”.
It said the steel consumption in Saudi Arabia has grown rapidly in the past few years on back of rising construction activities, growing investment in railways, and cheap and reliable energy supply. In the next five years, the Kingdom is expected to sustain its leadership in construction activities in the entire Middle East.
With multi-billion dollar projects underway in both public and private sectors, the country has gained a significant share in the total GCC construction spending.
Also, its economy is being propelled onto a whole new level with the building of four integrated economic cities.
The in-depth research found out that the steel industry in Saudi Arabia is highly import oriented. The report said steel consumption in Kingdom has reached around 12.1 million metric tons in 2011. “Due to such a strong demand and soaring domestic steel prices, the share of imported steel is expected to witness an upward trend in the coming years,” it noted.
Considering the prominent steel industry value chain determinants like production, consumption, pricing and key players, the report has presented a look at the sector's past, present, and future scenario. It also studied how the regulatory environment and initiatives taken by the government are affecting the market. Through the section of steel pricing analysis, we have tried to update clients about the fluctuating pricing trend and factors responsible for it.
According to analyst Frost & Sullivan, the annual demand for steel products in the GCC region stands at over 40 million tons, and is expected to grow at 5 percent to 6 percent over the next five years.
With some 67 steel plants currently in the Middle East region, with an investment valued at $2.8 billion, the steel industry in the GCC region has attracted a staggering $6.5 billion worth of investment to aid growth.
“Increasing demand, strong competition, increasing cost of raw materials and labor will lead to an increase in the price by 5 percent to 7 percent in the medium term of three to four years,” said Kumar Ramesh, Frost & Sullivan industry manager, environmental and building technologies practice for MENA and South Asia.
“Steel manufacturers in the GCC are exerting efforts to integrate and consolidate their position through mergers and acquisitions.
“The GCC is expected to be one of the biggest in the global steel market, with by-products such as pipes and tubes.
Also, the change will help the region to diversify its oil- and gas-based income.”
The impact of economic slowdown on the real estate projects was minimal. Out of the total real estate projects worth $543 billion, mere 4 percent have been cancelled or delayed. Hence, all these factors have fueled the consumption of iron and steel in the Kingdom.


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