Styling the future with steel [Archives:2006/1005/Business & Economy]
By: Abu Hamood Siddiqui
The planned launch of world's first steel futures next year by Dubai Gold and Commodities Exchange is signal enough to indicate the booming steel market in the region.
With more than US $1 trillion worth of construction projects planned or under way in the GCC alone, demand for steel products has grown to unprecedented levels. And with oil prices set to remain above $50 a barrel in the near future, the buoyancy is likely to stay for some time.
The economic boom has ensured that demand for steel products outstrips supply. For example, the GCC produces 7 million tonnes per year of steel reinforcement bar (rebar), which falls short of local demand of more than 9 million tonnes per year.
In Dubai alone, for example, over US $1.5 billion worth of construction, of which steel is the key ingredient, hit the market in the first six months of this year. While iconic super tower in the emirate – the US $20 billion Burj Dubai – consumed over 38,000 metric tonnes of steel rebar when it touched 70 levels in the first week of September, the completion of the seventh floor of the World Trade Centre Residence, a state-of-the-art 40-storey luxury residence in downtown Dubai, used 630 metric tonnes of structural steel components.
The continually increasing demand for steel has not only led to an upsurge in new steel plants but it is also forcing many industry giants to go for mergers and acquisitions in order to grab more market share in the region.
Saudi Iron & Steel Company, the wholly-owned subsidiary of Saudi Basic Industries Corporation (Sabic), is planning to double its production capacity to more than 10 million tonnes per year by 2015. Today, the Gulf's largest steel producer has a capacity of more than 3.3 million tonnes a year of long products and 2.2 million tonnes per year of flat products.
In Iran, which is taking all the efforts to strengthen the sector, steel production is due to hit 10.5 million tonnes by the year-end, according to Iranian Minister of Industries and Mines Ahmad Ali Harati-Nik. Iran's current steel demand is between 16 million tonnes and 17 million tonnes.
“Eight steel production projects are to be set up in the nation's less developed provinces. Each of the plants will be capable of producing 800