2017 REVIEW: Middle East promotes steel self-sufficiency agenda

Middle Eastern countries boosted their crude steel output in 2017, with producers calling for more trade protection measures to support self-sufficiency in the sector.

Middle East crude steel output reached 27.17 million tonnes in the first 10 months of the year, up by 13.29% from 23.98 million tonnes for the same period in 2016, according to the World Steel Association (Worldsteel).

Iran produced 17.90 million tonnes of crude steel over the period, a 20.92% increase; Qatar produced 2.24 million tonnes, a 4.87% increase; and the United Arab Emirates produced 2.74 million tonnes, an 8.57% increase year on year.

But output from Saudi Arabia declined by 5.09% to 4.29 million tonnes of crude steel in January-October 2017, driven by the country’s economic problems, which have weighed on demand.

The biggest steel producers in the Middle East are Hadeed Sabic in Saudi Arabia, Ezz Steel in Egypt and Emirates Steel in the UAE. Their crude steel production volumes totaled 5.27 million tonnes, 3.66 million tonnes and 3.15 million tonnes respectively in 2016 but 2017 volumes were not immediately available.

Market participants have called for more protection for the Middle East against dumped steel, noting energy costs are increasing in the region and producers are finding it difficult to compete with low-priced imports.

“The only major, and emerging, market that is unprotected [in the global steel complex] is the Middle East, and it is a natural choice for mass producers of steel to dump cheap and sub-standard material,” BS Shetty, the commercial general manager at UAE-based hot-dipped galvanized coil (HDG) producer Al Ghurair Iron & Steel, said, speaking at the Arab Iron & Steel Union (AISU) summit in Casablanca, Morocco, in October.

Steelmakers and governments must take protective action, given that almost half the region’s steel demand is being met by low-priced imports from China, Turkey, the Commonwealth of Independent States (CIS) region and Europe, all of which have excess capacity, George Matta, marketing director of Egypt’s Ezz Steel, said at the same conference.

Steel demand in the Middle East and North Africa dropped in 2017 due to budget cutbacks and inflationary prices, he added – especially in Saudi Arabia and Egypt.

Trade cases
While industry participants say more protections for the Middle East steel sector are needed, the region’s governments have several duty regimes in place and continuing anti-dumping investigations, including the following:

  • Gulf Co-operation Council (GCC) nations – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE – proposed in May that the World Trade Organization (WTO) introduce safeguarding duties on imports of color-coated coil. The suggested duty was 31% of the cif value of the product for the first year, falling to 25% in the second and third years. Duties will be introduced once the GCC’s Ministerial Committee approves the imposition of the measure, but the duty is yet to be approved. The investigation started in June 2016, and was prompted by a safeguard application filed by Saudi Arabia’s Universal Metal Coating Co (Unicoil).
  • The UAE passed legislation in May intended to create fairer competition and prevent the dumping of poor-quality imported materials in the country’s steel markets.
  • GCC nations said in September that they expect to make a final decision by the second quarter of 2018 on the imposition of anti-dumping duties on Chinese non-welded oil country tubular goods (OCTG) made of iron or steel with a radius under 16 inches.
  • Egypt made permanent for five years starting December 6, 2017, its anti-dumping duty on rebar from China, Ukraine and Turkey. Chinese rebar is subject to a 29% tariff, Turkish rebar 7-22.8%, and Ukrainian rebar 17.2-27%, all calculated from the cfr price. Egypt imposed preliminary duties on the three countries on June 6.

But Middle East steelmakers remained the target of trade protection measures from other regions in 2017.

For example, Thailand announced in February final anti-dumping duties on hot-rolled coil imports from Iran, alongside Turkey and Brazil. Taxes on products from Iran’s Mobarakeh Steel were levied at 7.25%, while the duty for other Iranian mills was set at 38.27%.

And the more trade protections Middle Eastern countries impose, the more likely it is that regional producers will be exposed to retaliatory measures, reflecting the delicate balance policymakers must strike in their attempts to encourage local steel production.