TOP STEELMAKERS 2018: Middle East steel production grows to meet rising regional demand

Steel demand in the Middle East will keep growing in 2018 and beyond, but the region needs trade protection measures to support local producers, according to UAE-based flat steel re-roller and coater Al Ghurair Iron & Steel (AGIS) chief executive officer Abu Bucker Husain.

In an interview on the sidelines of the 21st Middle East Iron & Steel (MEIS) conference in Dubai in December 2017, Husain told Metal Bulletin that because the Middle East (and especially the UAE) has historically been seen as a trading hub, the focus of governments in the region has been on promoting trade and logistics and they have not yet turned to nurturing their domestic manufacturing industries.

He also said the issues of unfair trade practices and dumping by foreign mills had been raised with the local chambers of commerce and the ministry of economy several times since 2009, but that he was still waiting for concrete actions to be taken.

Gulf Co-operation Council (GCC) countries are finding common ground over the threat from steel being redirected as a result of the US decision to impose tariffs on imports following the Section 232 trade investigation.

Saeed Al-Romaithi, CEO of the UAE’s biggest steelmaker, Emirates Steel, said that GCC countries were acutely aware of the issue and are keen to limit the impact of steel being redirected from the United States. The GCC countries are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.

Middle East crude steel production increased by 11.80% in 2017, with a total output of 32.45 million tonnes, compared with 29.03 million tonnes in 2016, according to Worldsteel data. The countries in the total include the United Arab Emirates (UAE), Iran, Saudi Arabia and Qatar.

“We see positive support from the authorities in the UAE and also in Saudi Arabia in moving to this direction – everybody is seeing what damage is being done and what’s happening to the steel industry in the region,” Al-Romaithi said at Metal Bulletin’s 6th World DRI & Pellet Congress in Dubai in late April 2018. “It’s a bit slow because the whole GCC is linked together [in terms of anti-dumping legislation] but something is definitely happening – the region is lacking the rules and regulations that we need to give us freedom to compete fairly in the market,” he said.

“From our point of view, the demand outlook for rebar [for] 2018-19 looks stable – we have the 2020 Dubai Expo and related infrastructure construction currently going on in the UAE,” Al-Romaithi said. “Right now, the market is still resilient and demand is still there - [and even] if there is not an increase, it will still be stable,” he added.

In March 2018, Saudi Arabia’s National Committee for the Steel Industry (NCSI) called for urgent action to be taken against imports being dumped in the country, specifically by raising import duties. “A report published in June 2016, by the Economic Policies Research Centre in London, points out that, among the G20 [group of industrialized] countries, Saudi Arabia has the fewest legal protection measures implemented,” the NCSI said.

The GCC ministerial committee announced a safeguard duty on imports of pre-painted galvanized coil (PPGI), or color-coated coil of over 600 mm in width in April 2018. The duty will not be applied on products from developing countries whose share of imports in the region accounts for less than 3% individually and less than 9% collectively.

UAE
Crude steel production in the UAE totaled 3.309 million tonnes in 2017, up by 5.08% on an annual basis from 3.149 million tonnes in 2016. Abu Bucker Husain expects steel demand to improve in 2018 and in the years ahead in the UAE and the rest of the Middle East. “[The full] 2018 should definitely be better than 2017 for a few reasons,” he said at MEIS 2017.

“Gross domestic product (GDP) growth should be an overall benefit for all businesses, and getting closer to the 2020 Expo [in Dubai] should be particularly beneficial for our galvanized sector because [increased] demand for galvanized [steel only] comes towards the completion of construction projects,” he added.

Husain also said that there was potential in the Middle East for automotive manufacturing. “If the industrial environment is made more appealing to auto manufacturers, then the big auto makers of the world will come here,” he said.

The country has almost stopped importing rebar since the second half of 2017, while billet imports continue, mostly from Iran. There are several new investments in the country, meaning it will be less dependent on imports in the coming years.

Conares Steel started construction of a new line to produce color-coated coil, or pre-painted galvanized iron (PPGI), early in January. It is being built in the Jebel Ali Free Zone, with equipment supplied by CMI Belgium. Conares Steel also started production at its 250,000 tonnes per year pipe mill in April 2018.

Dana Steel is adding 400,000 tonnes per year to the United Arab Emirates’ coated steel output with the installation of an HDG line and PPGI line in Dubai. United Iron & Steel started to produce HDG in January 2018. Its capacity is 250,000 tpy.

Iran
Iran recorded the highest crude steel output in the region, with 21.726 million tonnes of output, up by 21.41% from 17.895 million tonnes in 2016. The country ranked as the 13th largest steel producing nation in 2017.

However, US President Donald Trump announced his country’s withdrawal from the nuclear deal on May 8 and that the sanctions on Iran will be reimposed. “If Iran has to cut its steel export volumes [because it is] unable to finance deals, it will have to reduce steel output because the domestic market will not be able to consume it, despite recent demand improvements,” an Iranian producer source told Metal Bulletin on May 11.

The Iranian government set a target for steel production of 55 million tonnes per year by 2025. Iran has steelmaking capacity for around 30 million tpy of steel at present, of which 75% would be from direct-reduced-iron-consuming electric-arc furnaces (EAFs). DRI-based steel production is the preferred method in Iran because the country has extensive reserves of both iron ore and natural gas.

Saudi Arabia and Qatar
Saudi Arabia produced 4.77 million tonnes of crude steel in 2017, a 12.65% increase compared with 5.461 million tonnes a year earlier, according to Worldsteel data.

Demand for rebar imports remained weak in 2017, and so far in 2018, as local material was sufficient. In addition, the country removed the ban on rebar exports in late 2017 and the country started to export its products, mainly to East Asian countries. However, local demand for steel is not strong in Saudi Arabia, whose economy is also having hard times.

Qatar produced 2.644 million tonnes of crude steel in 2017, a rise of 4.88% from 2.521 million tonnes a year earlier.

This forms part of a longer article first published in the June issue of Metal Market Magazine, which carries in-depth feature articles, analyses and reviews of metal and steel markets.

See also: TOP STEELMAKERS 2018: Asia’s steelmakers take all but the premier slot in the top 10

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