With the drawing of the year 2007 near to its end, the last months of this year confirm the fact that this year was a continuation of 2006 on more than one scale, basically in the field of strengthening the growth status witnessed by this industry worldwide as well as in the Arab region. It is primarily noticed that most companies are operating in a considerable acceleration to accomplish the production increase. It has become certain that there are more than one company at the Arab level the production of each of which exceeds 4 million tons of finished products and there are several companies whose production will exceed for the first time the one million tons. This by itself is an expression of the confidence in the future of this industry which had seen during past years some reluctance or uncertainty.
This confidence has been consolidated by virtue of the demand for the steel products. The demand strength has imposed on steel the fact that the companies have to do their best in utilizing as much as they can of the available production capacity and to schedule certain periods of time to deliver the production orders. There are a number of companies which have stopped there exports or have considerably reduced the volume of these exports in order to satisfy the growing domestic demand which has come to be a source of power for these companies. This feeling of confidence in the future of this industry is due to the fact that the steel prices have maintained their strength and that during most of the past months they have taken the upward direction in spite of some price fluctuations, which achieved for most, if not all, companies a profit which has made them more able to execute their expansion plans which most often were stumbling as a result of the financing shortage or for considerations connected with the fear from the future.
In the last years, financing was one of the obstacles intercepting the growth of this industry. Nowadays, there is no real problem for financing the new steel projects in the Arab countries. The banks are now ready to finance the projects which the economic studies prove their feasibility. Also, with regard to investors, their standing in respect with being involved in investments in the field of steel industry is no longer based on the sense of risk or reluctance to enter into this field. In addition to what it holds of a positive association reflecting the financial solvency and the investors' investing capacity in this sector, this industry reflects an example of an industry running with profitability and within periods of time which are no longer long as it was looked at in the past, but the delay or reluctance in executing the new projects is the source of danger and not the speed of completion.
The successful bet depends on whom who arrives first, because this means time gaining, and the growing demand has become the remarkable feature of the steel business.
During the elapsed months of 2007 the Arab steel markets had seen a significant dynamism in multiple directions. Most of these directions reflect the growing status of the market. Imports from the world market increased and reached record figures during this year. Most of these imports concentrated in the region of the GCC countries and some countries in North Africa, in particular in UAE and Algeria whose imports accounted for the largest portion during 2007. The initial figures indicate that the Arab region ( the Middle East and North Africa ) will occupy in 2007 the first rank in respect with the volume of net imports at the world level.
On contrast, the Arab steel exports to the world markets declined below the level they had had in previous years, especially in long products. The Libyan Iron and Steel company has stopped its exports of reinforcing steel. Ezz Steel and SABIC Hadeed, which are the largest exporting companies, have also decreased the export quantities in order to satisfy the domestic market demand. Exports have mainly concentrated on flats and some other products. This requires us to have a look at the exports of flat products. Though important, continued growth of these exports reflects the poor consumption of the Arab market of steel flat products which entails the necessity of focusing on this significant industrial side because the steel industry is considered an industrializing industry, that is to say, an industry able to locate other industries to consume and use its products.
The majority of expansions at the Arab level are concentrated on producing long products which still account for 80% of the total Arab steel production. This means that most of what we produce is directed to the building and construction sector, while the flat products get a lower share.
Despite the fact that expansion in producing long products reflects the limit of the need for these products, resulting from the presence of a strong demand in this respect, the future of this industry lies in creating a balance between its products, long or flat, no matter. If expansion in the field of long products is a necessity to get rid of the outstanding deficiency, expansion in the field of flat products should draw a new image of this industry in the future.
What we see today of expansions in cold rolling mills sector, galvanization, special steel, and pipes sector is a profound step on the road to build a better future for this industry. Its future is not determinable by merely increasing the production capacities, that is to say, it does not depend upon the quantity only but also upon the extent of capability to utilize these production capacities and direct them towards the value-added industries which have today become the real competition field at the level of this industry worldwide.
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