Middle East Steel Industry are Facing both Opportunities and Challenges

Many industry analysts are focusing on China and India from the perspective of pulling the global steel demand growth in the future. After all, since 2000, China and India together accounted for 85 % of global steel demand increment, and is still expected to become the main factors to promote the growth of the global steel demand over the next decade. And in other regions of the world , such as Latin America , Africa and the Middle East, steel demand is also maintaining the momentum of rapid growth , though the base is relatively low.

Middle East covers different countries, so there is a big difference in the aspect of economic performance and prospects for development. But as a whole area, since 2000, the region average annual steel demand in compound growth rate among the world's second, 7.4 % during 2000-2013, only 8.8 % of the world's fastest growing areas in Asia. Since 2000, Asia iron and steel industry development has reached the unprecedented achievement.

Although the steel demand growth is very rapid, the role that Middle East plays in the global steel industry is still relatively small. In 2013 , the Middle East steel consumption accounted for only 3.4 % of the world's total consumption, and the proportion of  Asia is as high as 65 %. During 2000-2013, the Middle East accounted for 5 % of global steel demand increment.

In spite of this, the Middle East steel consumption is far more than its own size. In 2013, the Middle East steel consumption was of 55.1 million ton, but the region's population was of 230 million people, up to 245 kg per capita steel consumption, which is significantly higher than the global average of 236 kg. At the same time, with a population of 1.1 billion, African regions had the consumption of 36.8 million ton steel, with steel consumption per capita was only 33kg. India is the worst in major steel-producing countries. In 2013, the country's steel consumption was up to 81.4 million ton, nearly 1.5 times in the Middle East, but the population is 5.5 times that of the Middle East, India's steel consumption is only 64 kg per capita, which is about a quarter of the Middle East.

Another main reason why iron and steel industry of the region is important is that due to the steel production in the region can only meet the half demand of its own, so the Middle East region is the world's largest steel imports area. In the current steel market demand downturn period, the Middle East is therefore becoming the world's most attractive markets. Especially in 2014, the region became one of China's steel major export destination. According to statistics, in the first three quarters of this year, China's steel exports to the Middle East is about 5 million ton, up 44 % from a year earlier.

There are different steel growth demand in different countries in the Middle East. In 2000-2013, average annual compound growth rate of Qatar steel consumption was as high as 25.5 %, two times higher than China at the same time. It is also the world's fastest growing countries during this period. In 2013,steel consumption of Qatar reached 1104 kg per capita , only slightly lower than the global first ranking South Korea's 1106 kg.

During 2000-2013, average annual compound growth rate of the steel consumption of Oman, Iraq, Kuwait and the united Arab such Middle East countries remained in double-digit. As the largest steel consumer in Middle East, average annual compound growth rate of Iranian steel consumption is of only 4.7% during 2000-2013. Compared with 2011, the country's steel consumption decline up to 20% in 2013, which is mainly because of the country's economic sanctions and a 8.4% contraction. Based on Iran's poor performance in recent years, this means that since 2011, steel demand did not grow in the Middle East.

Steel demand growth in many countries in the Middle East appears intermittently. In 2009 , the united Arab emirates( uae )in the real estate market collapse, leading to a decline in its steel consumption by about 50 %. Despite the rebound, since 2013, the country's steel consumption reached 7.9 million ton, compared to the 2008 peak of 13.4 million ton reaching about 40 %. During 2006-2008, the united Arab emirates ( uae ) has been the world's largest per capita consumer of steel. All maintained at between 1500-2100 kg, far higher than South Korea ranking second in the same period, but has fallen to 958 kg in 2013.

Affected by the war, Syria's steel consumption has dropped from 2.5 million ton in 2009 to only 500000 ton in 2013. In contrast, Iraq's steel consumption grows significantly in recent years of 4.1 million ton in 2013, nearly four times as 2007. However , due to domestic political turmoil and the influence of civil war, it’s difficult for Iraq's steel consumption to keep on this level in the future.

In recent years, impacted by war, economic sanctions, and the real estate investment bubble, the Middle East steel demand appeared a lot of volatility, during the period of 2011-2013, there is no growth of the overall steel demand. In short term, the biggest threat to the Middle East will be the slump in oil prices since the beginning of the year. Oil revenues accounted for about 50% to 60% of the total economy in Saudi Arabia , Oman and Qatar, the proportion of 20 % to 20 % in Iran and the united Arab emirates ( uae ). In 2013, the Middle East accounted one-third of the world's oil production. For major oil-producing nations, it is more important to exports its oil production , and government revenue mainly comes from its oil and gas.

Recently, the Brent crude oil price has dropped to $65 a barrel less than 40 % of the average price of $ 110 a barrel in 2013. If the price of crude oil remains at a low level in 2015, it will cause serious negative impact on the economic growth of main oil-producing nations in the Middle East. And as these countries are important steel consumer in that area, so it will affect the steel demand. A drop in oil prices, of course, for those Middle East countries who rely on imported energy is a positive factor, so the declining demand of steel producers  may be recovered by the growth in demand in these countries. (source : world metal herald)

Middle East Steel Industry are Facing both Opportunities and Challenges

Many industry analysts are focusing on China and India from the perspective of pulling the global steel demand growth in the future. After all, since 2000, China and India together accounted for 85 % of global steel demand increment, and is still expected to become the main factors to promote the growth of the global steel demand over the next decade. And in other regions of the world , such as Latin America , Africa and the Middle East, steel demand is also maintaining the momentum of rapid growth , though the base is relatively low.

Middle East covers different countries, so there is a big difference in the aspect of economic performance and prospects for development. But as a whole area, since 2000, the region average annual steel demand in compound growth rate among the world's second, 7.4 % during 2000-2013, only 8.8 % of the world's fastest growing areas in Asia. Since 2000, Asia iron and steel industry development has reached the unprecedented achievement.

Although the steel demand growth is very rapid, the role that Middle East plays in the global steel industry is still relatively small. In 2013 , the Middle East steel consumption accounted for only 3.4 % of the world's total consumption, and the proportion of  Asia is as high as 65 %. During 2000-2013, the Middle East accounted for 5 % of global steel demand increment.

In spite of this, the Middle East steel consumption is far more than its own size. In 2013, the Middle East steel consumption was of 55.1 million ton, but the region's population was of 230 million people, up to 245 kg per capita steel consumption, which is significantly higher than the global average of 236 kg. At the same time, with a population of 1.1 billion, African regions had the consumption of 36.8 million ton steel, with steel consumption per capita was only 33kg. India is the worst in major steel-producing countries. In 2013, the country's steel consumption was up to 81.4 million ton, nearly 1.5 times in the Middle East, but the population is 5.5 times that of the Middle East, India's steel consumption is only 64 kg per capita, which is about a quarter of the Middle East.

Another main reason why iron and steel industry of the region is important is that due to the steel production in the region can only meet the half demand of its own, so the Middle East region is the world's largest steel imports area. In the current steel market demand downturn period, the Middle East is therefore becoming the world's most attractive markets. Especially in 2014, the region became one of China's steel major export destination. According to statistics, in the first three quarters of this year, China's steel exports to the Middle East is about 5 million ton, up 44 % from a year earlier.

There are different steel growth demand in different countries in the Middle East. In 2000-2013, average annual compound growth rate of Qatar steel consumption was as high as 25.5 %, two times higher than China at the same time. It is also the world's fastest growing countries during this period. In 2013,steel consumption of Qatar reached 1104 kg per capita , only slightly lower than the global first ranking South Korea's 1106 kg.

During 2000-2013, average annual compound growth rate of the steel consumption of Oman, Iraq, Kuwait and the united Arab such Middle East countries remained in double-digit. As the largest steel consumer in Middle East, average annual compound growth rate of Iranian steel consumption is of only 4.7% during 2000-2013. Compared with 2011, the country's steel consumption decline up to 20% in 2013, which is mainly because of the country's economic sanctions and a 8.4% contraction. Based on Iran's poor performance in recent years, this means that since 2011, steel demand did not grow in the Middle East.

Steel demand growth in many countries in the Middle East appears intermittently. In 2009 , the united Arab emirates( uae )in the real estate market collapse, leading to a decline in its steel consumption by about 50 %. Despite the rebound, since 2013, the country's steel consumption reached 7.9 million ton, compared to the 2008 peak of 13.4 million ton reaching about 40 %. During 2006-2008, the united Arab emirates ( uae ) has been the world's largest per capita consumer of steel. All maintained at between 1500-2100 kg, far higher than South Korea ranking second in the same period, but has fallen to 958 kg in 2013.

Affected by the war, Syria's steel consumption has dropped from 2.5 million ton in 2009 to only 500000 ton in 2013. In contrast, Iraq's steel consumption grows significantly in recent years of 4.1 million ton in 2013, nearly four times as 2007. However , due to domestic political turmoil and the influence of civil war, it’s difficult for Iraq's steel consumption to keep on this level in the future.

In recent years, impacted by war, economic sanctions, and the real estate investment bubble, the Middle East steel demand appeared a lot of volatility, during the period of 2011-2013, there is no growth of the overall steel demand. In short term, the biggest threat to the Middle East will be the slump in oil prices since the beginning of the year. Oil revenues accounted for about 50% to 60% of the total economy in Saudi Arabia , Oman and Qatar, the proportion of 20 % to 20 % in Iran and the united Arab emirates ( uae ). In 2013, the Middle East accounted one-third of the world's oil production. For major oil-producing nations, it is more important to exports its oil production , and government revenue mainly comes from its oil and gas.

Recently, the Brent crude oil price has dropped to $65 a barrel less than 40 % of the average price of $ 110 a barrel in 2013. If the price of crude oil remains at a low level in 2015, it will cause serious negative impact on the economic growth of main oil-producing nations in the Middle East. And as these countries are important steel consumer in that area, so it will affect the steel demand. A drop in oil prices, of course, for those Middle East countries who rely on imported energy is a positive factor, so the declining demand of steel producers  may be recovered by the growth in demand in these countries. (source : world metal herald)