The Middle East steel industry started off on a positive note from the beginning of this year, with demand for the metal picking up, as industry experts project a 15 per cent growth on the back of rising requirements from the UAE, Saudi Arabia and Qatar.
The main opportunity for steel traders in the GCC market arises from catering to the heavy supply demands that are the consequence of high expenditure in infrastrure development, which is fuelled, by high oil prices and population requirements, according to Asim Siddique, the managing director for Age Group in Dubai.
The UAE industrial sector expanded by nearly 11 per cent in 2011 while in Saudi Arabia, a $384 billion plan for infrastructure and industrial projects has been announced.
The Middle East region is clearly poised. Steel demand in the UAE has soared in the past few years in the backdrop of continuing infrastructure projects, cheap and reliable gas and energy supply, growing investments in the construction industry and other core sectors.
The country is therefore witnessing an unparallel development and revolution following the extraordinary growth in the construction and infrastructure industry.
According to a recent research report, demand for steel products have surged immensely over the past few years, backed by construction boom, growth in the real-estate investment, and rising income level.
The apparent consumption of finished steel products is expected to reach more than eight million metric tonnes by 2014-end, according to latest market research.
Industry experts however claim that the UAE steel industry in the past has been highly import-oriented. Steel imports grew around 15.5 per cent to about 6.7 million metric tonnes in 2010. With the reduction in import tariff by the GCC, imports of steel are expected to increase in the years to come. However, some major expansion plans of steel players in the country will increase domestic steel output further.
Sharjah, the industrial capital of the UAE, expects to achieve up to five per cent industrial growth in 2012, compared to last year, according to a top official of Sharjah Chamber of Commerce and Industry (SCCI).
The Emirate’s manufacturing sector contributes more than 35 per cent of the country’s total production. Last year Sharjah achieved Dh21 billion industrial productions, so it’s expected to achieve Dhs22.1 billion productions.
“On the basis of GDP forecast, we can target 3-5 per cent increase in industrial growth this year,” disclosed the director general of SCCI Hussain Mohammed Al Mahmoudi.
“To make it very conservative let’s say three per cent,” Hussain Mohammed Al Mahmoudi added.
There are over 1,700 industrial units in Sharjah and out of that 1,000 are based outside free zone in the Emirate. Al Mahmoudi mentioned that doing business in Sharjah is more economical than China.
Citing reasons, he said here you are very close to your target market and most of the people don’t know about custom duty waiver within GCC countries.