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Middle East Steel 2009
MEED, Jan 2009, Pages: 54
This report provides a comprehensive review of the sector in the GCC since 2005 and assesses the outlook for one of the region's most dynamic industries up to 2015. In addition to providing in-depth analysis of supply and demand, projected investment levels, the role of the private sector and the technology of wastewater treatment, the report gives a country-by-country overview of the wastewater sector for Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE by emirate, with detailed tables, charts, graphs and maps.
'With high stockpiles, particularly in the UAE, and slackening demand, steel prices are expected to remain subdued in 2009 in the range of $500 a tonne,' the report states. 'This would be a third of what they were at their peak in mid-2008, but a slight increase on their recent lows recorded in November 2008.'
With the Middle East being a major importer of semi-finished products and current global steel demand weak, the region is likely to become a focus for international steel suppliers, with the prospect of dumping returning. If this occurs, governments are likely to re-impose custom duties on steel imports in an attempt to protect local manufacturing, although such moves will do little to bolster prices.
According to Middle East Steel 2009, the longer-term outlook for the Middle East steel market is more promising. 'Given an expected rebound in the oil price in 2010, fuelling economic growth and capital investment, steel demand is set to rise over the next five years.
'Major, government-backed players in the regional steel industry appear to be well insulated from the effects of the global slowdown. However, the smaller, private sector firms, especially in the downstream arena, look vulnerable to a prolonged economic downturn, raising the possibility that there may be some much-needed consolidation in the industry,' the report adds.
Middle East Steel 2009 reports that the global downturn and the lack of available project finance have put the brakes on regional expansion projects, particularly in the downstream sector. In the upstream sector both Bahrain-based holding company Foulath and Brazil's Vale (formerly CVRD), which are planning major investments across the region, maintain that their projects will proceed despite the difficult trading conditions.
'If implemented, the projects will take regional pelletising capacity up to 68 million tonnes per year (t/y) by 2013,' forecasts the report. 'The slowdown will have a major impact on Iran's much-publicised plans to quadruple steel production over the next five years, which were already in trouble due to a lack of finance and bureaucracy prior to the onset of the credit crunch.'
However the report warns, 'A growing issue for the regional steel industry going forward will be the availability of competitively-priced gas feedstock. With competition for limited supplies intensifying from the regional oil and utilities sectors, new gas allocations are likely to cost much more than in the past, when steel producers could count on a gas price below $1 a million BTU.'
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