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Saudi steel output to grow 9% yearly
Published in The Saudi Gazette on 26 - 05 - 2012

The booming Saudi construction sector bodes well for the steel market, with the Kingdom's steel production forecast to grow by CAGR of 9 percent during 2012-2015, said RNCOS in its report "Saudi Arabia Steel Industry Forecast to 2013".
Saudi Arabia is one of the most attractive destinations for global crude steel producers. Factors that prompted investors to capture the market include its geographical location being equidistant from Africa, Europe, and the Asian countries; cheaper availability of labor compared to Europe and America; and cheap and reliable energy and gas resources.
A fast-growing market has encouraged major players in the steel sector to announce new projects and expand the existing ones.
The Gulf Cooperation Council has gained a substantial position as a prominent player in the global steel industry over the past few years. Backed by an ever-increasing demand from the construction industry, steel consumption throughout the region has increased and the GCC construction industry has sustained itself towards achieving a substantial position over the past few years. However, construction sector is the most significant sector for steel consumption in Saudi Arabia.
Further, the report discusses how the Kingdom showed its resilience to the downturn in the construction industry, which affected all the GCC countries. 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.
Major opportunities still exist in GCC construction markets despite continuing delivery issues related to current projects, Deloitte said recently.
The Deloitte construction industry report also indicated that longer term infrastructure investment plans for the region are estimated to be worth in excess of $1 trillion.
Key findings in the Deloitte report indicated that large infrastructure projects, particularly around social and transport infrastructure, will offer "tremendous opportunities" for contractors.
Upstream and downstream oil and gas related developments in the coming years will also bring benefits to contractors, Deloitte said.
The report said that there is "imminent growth" in the Saudi Arabian construction industry, being the biggest market in the GCC in terms of population and GDP.
The government is undertaking grand investments, with plans nearing $400 billion in five years, including schools, hospitals, universities, houses, airport expansions, and new railway infrastructure and road improvements.
Rizwan Shah, managing director, Corporate Finance, and leader of Deloitte's Capital Projects Advisory Services practice for the Middle East, said: "What primarily differentiates participants in the GCC's construction industry from their Western counterparts is that grand opportunities continue to be capitalized upon across the region, despite being forced to deal with continuing negative financial circumstances - simultaneously - in specific locales." "The region certainly is expected to continue to offer a lot of opportunity for contractors," added Cynthia Corby, audit partner Deloitte Middle East and leader of the construction industry for the UAE, added.
In terms of projects in the pipeline across the Middle East, the majority are social (36 percent), 29 percent power-related, 13 percent in transport and 13 percent in oil and gas, the report said.


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