A record high budget for 2011 announced by Saudi Arabia last week will boost domestic steel production as it allocates large funds for infrastructure projects, the Gulf Kingdom’s largest bank said on Tuesday.
In 2010, Saudi Arabia’s crude steel output was estimated at around 4.6 million tonnes, nearly 0.3 per cent of the world’s total steel production of around 1,392 million, National Commercial Bank (NCB) said in a study.
The study, sent to Emirates 24/7, said the kingdom’s steel production this year was nearly eight per cent higher than in 2009.
Citing data by the 66-nation World Steel Association, the report showed total global steel output stood at 114 million tonnes in November 2010, an increase of around 5.1 per cent over November 2009.
Saudi Arabia, the world’s top oil exporter, ranked second out of total steel production in the Middle East for the first eleven months of 2010, accounting for 27 per cent, following Iran’s production of 10.9 million tonnes, NCB said.
It noted that Saudi Arabia’s highest steel producing month during 2010 was that of January, the same month the Saudi Government re-imposed the five per cent custom duty to streamline domestic demand.
“In November, the Kingdom’s steel production had decreased by around 18 per cent to 388,000 tonnes. However, the year-on-year increase in the Kingdom’s production reflects the gradual return of pace to construction activity in the domestic economy,” the study said.
“The Kingdom’s budget released last week, with its emphasis on infrastructure projects will translate into increasing demand for steel in 2011, coupled with the potential demand emanating from the much talked about railway projects. Domestic steel prices are likely to hover around USD3,200 per metric tonne.”
Saudi Arabia’s production of steel, cement and other construction materials is expected to rise in the next few years as the country is pushing ahead with expansion projects to meet a steady increase in domestic demand and export the surplus as part of an economic diversification programme.
Other Arab countries have launched expansion plans and new projects to increase their steel output and this will push up the overall steel production in the region from around 20 million tonnes in 2009 to 30 million tonnes in 2014.
In recent comments, an Arab industry official said regional nations are considering the creation of a giant steel company that will ensure the growing domestic needs of the metal and face strong foreign competition.
“The Arab iron and steel companies are planning to set up a giant alliance to invest in steel and iron so it will be an influential force in providing the region’s needs of these metals and market its products,” said Chairman of the Algiers-based Arab Iron and Steel Union (AISU) Hilal Al Tuwariki “Scores of Arab iron and steel firms have agreed on the general principle of this company and its future plans, which include expanding its market share and competing with foreign companies…more Arab firms are expected to join it.”