Arabian Business reported that the slump in the Gulf’s construction industry due to the economic slowdown could see the demand for steel drop by as much as 35%.
The Dubai Multi Commodities Centre estimated that steel consumption in the region could drop to 9 million tonnes this year down from about 14 million tonnes in 2008.
Mr John Short ED for steel at DMCC said that "It"s obvious to most that demand will come off with announced slowdowns less on site consumption occurring per active project, stoppages of active projects and less building project starts."
Construction in parts of the region has slowed with projects delayed or even cancelled. A report by the research firm Proleads stated that USD 582 billion worth of projects in the UAE are now on hold. But, this is not indicative of the entire region as countries like Abu Dhabi are continuing to see growth.
Mr Short said that the construction industry accounted for more than 80% of Gulf steel demand. Steel rebar prices are now below USD 500 a tonne, down from the peak of around USD 1200 a tonne seen in the Q4 of 2008.