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.
National Commercial Bank said in a study that in 2010, Saudi Arabia’s crude steel output is estimated at around 4.6 million tonnes, nearly 0.3% of the world’s total steel production of around 1,392 million. The study, sent to Emirates 24/7, said the kingdom’s steel production in 2010 was nearly 8% 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% over November 2009.
NCB said that 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%, following Iran’s production of 10.9 million tonnes.
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.
The study said that "In November 2010, the Kingdom’s steel production had decreased by around 18% 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."
It added that "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 USD 3,200 per 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 program.
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.
Mr Hilal Al Tuwariki chairman of Algiers based Arab Iron & Steel Union said that "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. 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."