SABIC biggest individual steel supplier in 2010

Figures find Saudi giant beaten only by consortium as UAE market wanes

SABIC has increased its production by 26% this year.
SABIC has increased its production by 26% this year.

Saudi Basic Industries Corporation (SABIC) is the single biggest steel maker by production in the Arab world, according to the latest measure.

Argaam, the Gulf-based financial data service, has found that the Riyadh-based company, which is also a market-leading manufacturer of fertilisers and chemicals and plastics, has produced 2.242 million tonnes for the first five months of this year. This represents an increase of more than 26% compared to the first five months of 2009, which produced 1.7 million tonnes.

SABIC’s output was only topped by a grouping of Egyptian steel makers which includes Ezz Steel, the country’s largest producer. Together the companies manufactured 2.531 million tonnes during the first five months of 2010, up 13.5% from January-May 2008 in which it produced 2.23 million tonnes.

Mesaieed-based Qatar Steel followed SABIC in third place, producing 823,000 during the first five months, rising more than 91% from 430,000 for the same period last year. The company is owned by Industries Qatar and has a UAE-based subsidiary, Qatar Steel Company FZE.

Libyan Iron & Steel Company, one of the largest manufacturers in North Africa, came fifth, producing 249,000 between January and May. Indian firms Sona Steel Enterprises and ArcelorMittal, run by entreprenuer Lakhshmi Mittal, were sixth and seventh in the list. ArcelorMittal recently saw a strike in its Algerian plant in the El Hadjer plant in the Eastern region, though yesterday workers voted to return to work.

The geographical spread of the biggest producers nevertheless has resulted in certain regions that have experienced difficult market conditions so far this year, particularly in the UAE where the number of construction projects that might source locally is still relatively low.

“The first half was average and the second half very bad,” said one trader to ConstructionWeek, describing the last two quarters.

In April there had been concerns that the lobby by the world’s biggest miners to change the terms of contracts amid rising prices for iron ore – a key ingredient to steel - would have a knock-on effect.

Mr Govia, at Gulf Steel Industries in Dubai, part of Emirates Buildmat, said yesterday that though there was no direct effect on price from that lobby, it has been a [period of higher prices that have pressurised the import market. “We receive the steel for about 720 dollars and resell it at 550-560 into the local market – demand is almost negligible. There have been a lot of payment problems and the situation is difficult.”

He added that the ability to expand and capitalize on the big projects in places like Saudi Arabia is hampered by price wars from regional and foreign providers alike.

“Saudi Arabia demands a very low price as it also buys in from Turkey, which is cheap. Then Qatar and other countries have their own production lines and there is, of course, no customs duty.”

Though a few more projects are in progress in Dubai, the current market and financial climate is a challenge. “There are not very many projects because there’s a restriction on bank lending; the banks have become very selective when it comes to project finance.”

On ConstructionWeek reader commented that a sustained higher price for steel would put pressure on the MEP industry, which is “already reeling under the downturn and has recently started showing some positive trend”.


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