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Where Does The Arab Steel Industry Stand? |
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06/07/2008 10:20:00 Many of those involved in the steel industry are in agreement to describe the state through which this industry is passing as a state of prosperity. Some see in the rise of prices up to unprecedented record figures an expression of this state. Others also see that the arrival of this industry at the figure of one billion and 344 million tons of crude steel another expression of the great ambition of this industry to maintain the role of leadership in the manufacturing processes as well as in increasing their contribution to what is going on of an economic development worldwide., because prosperity of this industry means an economic prosperity and vice versa. Maybe the growth of the average per capita consumption of steel at the world level up to about 200 kg, with an increase of about 20% over what it was two years ago, is an expression of the economic state at which the level of the per capita consumption of steel often is an indicator used for determination of the level of development in this or that direction. We may also add a new indicator to these indicators imposed by the globalization conditions. This indicator is the size and extent of integration of companies, either at the local or regional level. The last years have seen a strong trend towards increasing the number of companies which have big production capacities. The number of the companies the production of each of which had exceeded ten million tons in 2007 were 29 companies, and those the production of each of which exceeded 20 million tons were ten companies. This new development in the trend of having big globalized companies has come to determine some of the features of the future development of this industry, because the big volume means the ability to control the markets and direct the prices. It also reflects the state of integration of the production chain, which determines the ability to be competitive in markets where the competition level is increasing at more than one level against these indicators which reflect the state of prosperity of this industry or which, at the level of companies, improve their financial positions as a result of the price rises which at the beginning of the first quarter of this year reached record levels never known at any time before.. The question for the Arab steel industry is : Where does this industry stand? And is it really in a strong position qualifying it to have a distinct position among the steel industries at the world level? In the 8th International Arab Iron and Steel Conference held in Doha during March of this year a number of international analysts presented points of view on the future of this industry at both regional and local levels. Mr. Peter Marcus from the World Steel Dynamics is of the opinion that the Middle East region ranks second among the best five locations in the world to build a steel plant. India is the first, followed by the Middle East, USA, Russia and Brazil. He sees that these regions provide a promising environment for the steel companies and that the companies in these countries have important competitive advantages. World Steel Dynamics has stated 27 world companies enjoying important competitive advantages at the world level among which are Ezz Steel in Egypt. In line with this analysis came the analysis of Jacques Astier, an international consultant from France, who sees that the steel industry in the Arab region is developing very fast, which will enable it to catch up with what is known as the well known BRIC countries which are Brazil, Russia, India and China, taking into account that the share of each one of these countries of the world steel production during 2007 was in the order of China ( 34.6%), Russia (5.4%), India (4%) and Brazil (2.5%), while the share of the Arab companies is still within the limits of 1.2%. This vision was also expressed in the conference by the Chairman of Al-Tuwairqi Group, Dr. Hilal Al-Tuwairqi, by inviting the Arab companies to set up alliances to form Arab steel companies in suitable locations in the Middle East and North Africa the production capacity of each of which will be five million tons per year, which will create a healthy and sustainable future for the Arab steel industry. This vision for the steel production in the Arab region is supported by the existence of cheap power and natural gas. This promising vision of the future of the steel industry in the Arab region is based on realistic data of which is the fact that this industry has achieved growth rates which are considered among the fastest rates at the world level in order to meet the increasing steel demand requirements a big portion of which is now covered by reliance on imports and which are also strengthened by accelerating the process of executing the new projects which will double the present production capacities during the next ten years benefiting from the available financing possibilities as well as from an analytical view to the constraints faced by this industry, in particular bridging the gap between the rolling capacity and the crude steel production, which has subjected many rolling mills to the control of the world suppliers of the steel squares as well as to the price volatilities of this material which in certain times reach as much as or sometimes exceed the prices of the finished product. In any case, the Arab steel industry, while it is growing fast, expresses, by its accelerated movement, the extent of its capability to adapt to the international changes. Perhaps the biggest challenge facing this industry at present is not only increasing their share in the world production and their capability to compete but also to arrange for correcting the image of this industry in the eyes of consumers for whom the price rises caused creation of a climate of the trust crisis between producers and consumers. The climate of the crisis is about to be common among many regions in the world irrespective of the varying degrees of its intensity and level according to the economic conditions. This crisis may perhaps stimulate this industry to exert more efforts to develop the steel production and adapt it to the market requirements in order to make this industry more responsive to the needs and requirements of the domestic markets. Arab Steel |
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