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2007: New Dynamism of Arab Steel Companies |
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06/07/2008 10:19:21 The Arab Steel companies have entered into 2008 strongly, pushed by positive important achievements in 2007. Several companies have registered new record figures in their production and sales. Also the profits achieved by these companies, though passively influenced by the steel inputs high prices, have also been at the level making the steel companies live a state of confidence which they were afraid to lose during some months of the last years, as a result of the swinging situation of supply and demand and emergence of a sort of restriction on exports in some markets under the pressures of the necessity to secure the needs of the local market. The year 2007 has achieved a new dynamism in the steel sector at more than one level. Reaching a figure of five million tons per year has been objective for the largest two steel producing companies in the Arab countries. Ezz steel has come closer to this figure by reaching a figure of 4.853 million tons per year of finished products. Hadeed Company of SABIC has reached a figure of 4.742 million tons per year of the same products. Exceeding the five million tons per year by each one of these two companies in 2008 is an achievable objective. Production of these two companies accounts for about 9.6 million tons per year, that is, about 42% of the total Arab steel production in 2007, which is expected to have reached 23 million tons of finished products per year, that is, with an increase of about two million tons over the level of 2006. Hadeed company of SABIC has contributed to the larger part of this increase, as its production in 2007 had increased by about 800 thousand tons over the level of 2006 as a result of coming of a number of expansions on stream. Qatar Steel company also has contributed by about 228 thousand tons. Its production in 2007 came close to one million tons, as it reached 958 thousand tons of reinforcing steel. Production of the Libyan Iron and Steel company exceeded one million tons. It reached 1.147 million tons of finished products of which production of flat products constituted about 52%. We have used some figures only to indicate the development trend of the steel industry in some Arab countries. These figures show that there is a considerable acceleration of growth. Hadeed company of SABIC has achieved a growth rate of 20% and Qatar Steel 31%. There is more than one company which achieved growth rates which are not less important than these rates. All companies are running a race to reach higher production figures in order to strengthen their position and role in the markets where demand and competition are very strong. Perhaps the most prominent aspect of the development of the Arab steel industry in 2007 is the acceleration of its growth and increasing the volume of its contribution to the world production, though it is still very limited. This contribution, however, is growing year by year. This is realistically represented by two Arab countries, Egypt and Saudi Arabia, which ranked 27 and 35 respectively among the 40 top crude steel producing countries in 2007, according to the International Iron and Steel Institute (IISI). These ranks would not have been achieved without the distinct dynamism of a number of companies which are called "the dominating" companies because their production constitutes the biggest part of the local production, and because their share in the market is also the biggest one. This trend related to the existence of a number of the large or dominating companies which are able to grow faster in their markets is not restricted to the steel companies in the Arab countries, but it is an international trend which is strengthened and develops at both regional and local levels towards setting up alliances and mergers or towards expansions and acquisitions for strengthening their positions in both local and regional markets. The year 2007 has witnessed, in respect with the Arab steel industry a support for going to acquisition, in particular in the field of cold-rolling industry. Kandil company in Egypt has acquired Galva Metal , the company's local competitor which increased its production capacity up to 600 thousand tons per year. Universal Metal Coating Co. Ltd (UNICOIL) also has acquired Sidq Company which is also the company's local competitor. These two transactions have constituted a significant trend towards entering into new acquisition transactions in the steel sector, which will open the road more strongly for bigger and more comprehensive transactions. A quick glance at some of what was achieved in 2007 makes us believe that it was another year to be added to the previous years during which the Arab steel companies had seen important developments to strengthen their positions in their local markets, and that it was a year for new opportunities which provided the world steel industry with the possibility of entering into important positions in the Arab markets. Arcelor Mittal has got a licence to set up a new project in Egypt, which will strengthen its presence in Algeria, Morocco and Saudi Arabia. Several Arab companies also got licences to set up new projects either within or without the regional borders as is the case for Ezz Steel which has got a new project in Algeria to produce 1.5 million tons per year of reinforcing steel with the possibility of expansion up to 3 million tons per year. These opportunities obtained by the steel industry expresse an attitude of openness which is no longer a source of fear for the Arab steel companies but a source of confidence which will strengthen the capability of competitiveness. How will the situation be for the year 2008 ? It seems that the steel companies have entered into 2008 with a sort of confidence supported by a growing demand in the markets. The growing demand has been associated with an unprecedented increase of the prices of the steel products and raw materials which gave a cover to the steel producers to justify the prices increase, but these rises of prices have created a climate of uncertainty between producers and consumers which will bring about risks on the the current dynamism of the steel markets. Arab Steel |
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