A sustained economic and construction boom triggered by soaring oil
prices has given a strong push to the steel industry in Saudi Arabia
and strong demand has boosted prices to one of their highest levels, a
key Saudi bank said yesterday.
Despite hectic competition from
imported steel, the local industry is projected to continue flourishing
because of surging demand as the kingdom is pushing ahead with projects
worth more than $460 billion (Dh1.69 trillion), including a major steel
railway linking its east and west, the National Commercial Bank (NCB)
said in a study on Saudi Arabia's steel industry
Its forecasts showed total supply of iron and steel products will grow
by 13.8 per cent to 15.57 million tonnes in 2008 with domestic demand
set to absorb 89.4 per cent (13.9 million tonnes) and exports 10.6 per
cent (1.65 million tonnes). Supply from domestic production meets
nearly 55 per cent of the total market demand while imports account for
the remaining 45 per cent.
Saudi crude steel output rose by 21.9
per cent to 1.3 million metric tonnes in the first quarter of 2008 from
the first quarter of 2007. The report showed the kingdom's exports of
iron and steel products will rise by about 6.5 per cent to 1.65 million
metric tonnes in 2008.
Domestic demand for steel products is
projected to expand by nearly 14.7 per cent to 13.92 million metric
tonnes in 2008. Total market value of iron and steel products is
expected to rise 18.7 per cent to SAR43bn (Dh42.17bn) in 2008.
"The Saudi economy doubled since 2002, with GDP rising from SAR707bn to
SAR1.41 trillion in 2007 and the medium-term outlook through 2010 is
very favourable. The current boom is accompanied by an acceleration of
economic reforms and sharply growing inflows of foreign investment,
adding to the sustainability of the boom, but with inflationary
pressure," it said.
"In the next five years, a growing number of
mega-projects with estimated investment of SAR1.73trn are entering
implementation stages while some of them have already started civil
works that we expect to continue in the next 15-20 years. All of these
projects contain a large construction component which would induce
aggregate demand for steel and cement. We expect growth in steel demand
to remain strong in the coming years."
According to NCB, Saudi
Arabia's largest commercial bank, the kingdom's steel industry has been
successful in achieving import substitution of numerous products,
particularly those subjected to 20 per cent protective custom duty.
The
figures showed Saudi steel imports jumped by nearly 40.1 per cent to
6.4 million metric tonnes in 2006 and are estimated to have edged up
further by five per cent to about 6.7 million metric tonnes in 2007.
In
the same period, Saudi Arabia exported 1.5 million tonnes and 1.6
million tonnes, respectively. Thus, net imports (imports minus exports)
shot up by 84.6 per cent to 5.2 million tonnes in 2006 and are
estimated to have risen by 6.1 per cent to 5.2 million tonnes in 2007.
In
value term, steel imports rocketed by 70.6 per cent to SAR21.4bn in
2006, and are expected to have further grown by 2.4 per cent to SAR22bn
in 2007.
"One of the significant achievements of the Saudi iron
and steel industry has been its clear ability to expand exports while
enhancing the value-added factor in the domestic economy," the study
said.
"In general, the overall iron and steel industry has
reached a development stage whereby it is not only competing with
foreign products in the domestic market but also has captured a notable
share in the neighbouring foreign markets."
According to the
study, at an overall average price of SAR2,620 per tonne, the aggregate
market value of iron and steel products sold by the Saudi Arabian
companies is estimated to have swelled by 24 per cent to SAR36.2bn in
2007.
"The sharp rise in steel prices and volume of consumption
in the kingdom were the major factors behind rising market size last
year," it said.
"Thus, in the domestic market perspective, the
likely future of capacity overhang situation would tend to intensify
competition among local steel producers and foreign exporters.
"This,
however, is likely to affect domestic steel producers' long-term
profitability notwithstanding, the kingdom's supportive regulatory
regime along with cheap energy cost and the protective tariffs, local
industry will continue to maintain a competitive edge over foreign
producers," the report said.
The study noted that the massive
wave of ongoing construction activities in Saudi Arabia has created
what it described as a "sizeable transient demand" for building
materials including numerous steel products and reinforcing bars.
"In
addition, the establishment of seven new economic cities and the
approval of the much awaited steel intensive railway project linking
east and west of Saudi Arabia are set to create huge amount of demand
for steel in the next five to ten years. In response to emerging huge
transient demand, major players in the steel industry have drawn plans
to expand industrial capacity," the study said.
http://www.business24-7.ae/Articles/2008/9/Pages/09032008_38f9e28c5ea848c0a97a227c21e07fcb.aspx
prices has given a strong push to the steel industry in Saudi Arabia
and strong demand has boosted prices to one of their highest levels, a
key Saudi bank said yesterday.
Despite hectic competition from
imported steel, the local industry is projected to continue flourishing
because of surging demand as the kingdom is pushing ahead with projects
worth more than $460 billion (Dh1.69 trillion), including a major steel
railway linking its east and west, the National Commercial Bank (NCB)
said in a study on Saudi Arabia's steel industry
Its forecasts showed total supply of iron and steel products will grow
by 13.8 per cent to 15.57 million tonnes in 2008 with domestic demand
set to absorb 89.4 per cent (13.9 million tonnes) and exports 10.6 per
cent (1.65 million tonnes). Supply from domestic production meets
nearly 55 per cent of the total market demand while imports account for
the remaining 45 per cent.
Saudi crude steel output rose by 21.9
per cent to 1.3 million metric tonnes in the first quarter of 2008 from
the first quarter of 2007. The report showed the kingdom's exports of
iron and steel products will rise by about 6.5 per cent to 1.65 million
metric tonnes in 2008.
Domestic demand for steel products is
projected to expand by nearly 14.7 per cent to 13.92 million metric
tonnes in 2008. Total market value of iron and steel products is
expected to rise 18.7 per cent to SAR43bn (Dh42.17bn) in 2008.
"The Saudi economy doubled since 2002, with GDP rising from SAR707bn to
SAR1.41 trillion in 2007 and the medium-term outlook through 2010 is
very favourable. The current boom is accompanied by an acceleration of
economic reforms and sharply growing inflows of foreign investment,
adding to the sustainability of the boom, but with inflationary
pressure," it said.
"In the next five years, a growing number of
mega-projects with estimated investment of SAR1.73trn are entering
implementation stages while some of them have already started civil
works that we expect to continue in the next 15-20 years. All of these
projects contain a large construction component which would induce
aggregate demand for steel and cement. We expect growth in steel demand
to remain strong in the coming years."
According to NCB, Saudi
Arabia's largest commercial bank, the kingdom's steel industry has been
successful in achieving import substitution of numerous products,
particularly those subjected to 20 per cent protective custom duty.
The
figures showed Saudi steel imports jumped by nearly 40.1 per cent to
6.4 million metric tonnes in 2006 and are estimated to have edged up
further by five per cent to about 6.7 million metric tonnes in 2007.
In
the same period, Saudi Arabia exported 1.5 million tonnes and 1.6
million tonnes, respectively. Thus, net imports (imports minus exports)
shot up by 84.6 per cent to 5.2 million tonnes in 2006 and are
estimated to have risen by 6.1 per cent to 5.2 million tonnes in 2007.
In
value term, steel imports rocketed by 70.6 per cent to SAR21.4bn in
2006, and are expected to have further grown by 2.4 per cent to SAR22bn
in 2007.
"One of the significant achievements of the Saudi iron
and steel industry has been its clear ability to expand exports while
enhancing the value-added factor in the domestic economy," the study
said.
"In general, the overall iron and steel industry has
reached a development stage whereby it is not only competing with
foreign products in the domestic market but also has captured a notable
share in the neighbouring foreign markets."
According to the
study, at an overall average price of SAR2,620 per tonne, the aggregate
market value of iron and steel products sold by the Saudi Arabian
companies is estimated to have swelled by 24 per cent to SAR36.2bn in
2007.
"The sharp rise in steel prices and volume of consumption
in the kingdom were the major factors behind rising market size last
year," it said.
"Thus, in the domestic market perspective, the
likely future of capacity overhang situation would tend to intensify
competition among local steel producers and foreign exporters.
"This,
however, is likely to affect domestic steel producers' long-term
profitability notwithstanding, the kingdom's supportive regulatory
regime along with cheap energy cost and the protective tariffs, local
industry will continue to maintain a competitive edge over foreign
producers," the report said.
The study noted that the massive
wave of ongoing construction activities in Saudi Arabia has created
what it described as a "sizeable transient demand" for building
materials including numerous steel products and reinforcing bars.
"In
addition, the establishment of seven new economic cities and the
approval of the much awaited steel intensive railway project linking
east and west of Saudi Arabia are set to create huge amount of demand
for steel in the next five to ten years. In response to emerging huge
transient demand, major players in the steel industry have drawn plans
to expand industrial capacity," the study said.
http://www.business24-7.ae/Articles/2008/9/Pages/09032008_38f9e28c5ea848c0a97a227c21e07fcb.aspx
