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The year 2009: A Look Forward |
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17/05/2009 13:43:21 It would sometimes be interesting to have a look backwards, especially if what we will look at carries to us the power of going on forward with confidence. This was the case of the Arab steel industry over the last five years. This industry saw a strong positive growth not only at the production level, the growth of which accelerated, or at the consumption level which doubled during these years, but also at the profitability, level achieved by most steel companies, which made it stronger, consequently, more attractive. Despite the positivity of looking backwards under such a situation, it, while we are at the beginning of a new year seeing a great transformation in this industry, would be important to look forward and not backwards, because what is important is what will come and not what had passed in spite of its importance. Many differ in thinking about what the year 2009 will carry of surprises. There are some who see that the worst has already passed with the year 2008, the fourth quarter of which had seen an enormous decline at the level of both production and consumption, as well as at the level of having huge stocks of steel products carried forward to the year 2009, which will make this year overburdened with a lot of problems left to it by the year 2008. It would perhaps have been the worst that was faced by this industry during the last quarter of the year 2008, which is the steep fall of prices compared with what was the case in the first half of the same year. Some products lost about two thirds of the prices at which they were being sold only six months ago, which created a strong shock to this industry. This situation with all its negativities have been reflected on the market where the vision shook out and became so foggy that the confidence of the consumer, which is the main power and guarantees the stability and growth of the market, was lost. The decline of the world steel production during the fourth quarter of 2008 compared with the same period of a past year, was a scene different from what the industry was familiar with over more than five years. This decline with the force of its fall was equal to all developing and developed countries, including the major driving power of this industry, China, whose production accounts for 48% of the total world production. It would be obvious that this crisis which hit the world economy is not a crisis for one industry alone, nor for one country alone, but it will have its impact and extensions all over the world, and at the level of a big number of industries, in particular the export-oriented industries, such as the iron, steel, aluminium, automotive and other industries. Despite the fact that the degrees of impact would be different according to the conditions of each industry, it would be fundamentally important to have a rapid move to face this crisis, or perhaps to stand steadfast in the face of what it would leave of negative consequences. This would be more important to be directed to recover the consumer's confidence which was strongly shaken during the past months. The last meeting of the AISU's Board of Directors in Cairo during the end of January 2009 had been held within the perspective of the required move to talk about and discuss the present situation of the steel industry. A host of issues have attracted the attention of participants in this meeting, among which were the strong competition faced by the Arab markets. We may concentrate on this point for two main reasons: the first is that the Arab markets, as it is seen in the indicators of the first two months of this year, still represent attraction for exporters, evidenced by the volume of exports made to a number of Arab markets, such as Egypt and Algeria, as exports doubled several times in comparison with what they had been at the same period of a past year. This point would perhaps look positive, as an indicator of the consumption situation in a number of Arab markets, suggesting that the negative consequences of the global crisis were less risky for the Arab markets than for their counterparts of the world markets. The other reason calling for consideration at this point is that continuing the import operations, with no restrictions on imports, while imposing restrictions on exports, will negatively affect the situations of the Arab steel producing countries, which, over the past years, when there were no restrictions on export, asserted their ability to compete in the world markets and increase the volume of their exports. This situation has required the last meeting of the AISU's Board of Directors to demand cancelling any embargo or duties, on exports, if any, which will help promote exports. It would be of importance here to point out that increasing the rates of utilization of the available production capacities, according to the market requirements, will contribute to reducing the production cost in such a way as to make production more competitive, which will be a support for the companies exporting power, at a time the exporting forces are competing to have a place in the world market. Once again we go back to the beginning from which we set out in this editorial, that is, stressing that the look forward and not backwards should be what we have to think of, because, in spite of the negative repercussions of this crisis, the Arab steel industry possesses the fundamentals of the growth supported by the available potentialities to finance the outstanding projects or the projects planned to be set up, with governmental developmental projects enabling activation of economy and acceleration of the growth wheel. The rapid growth movement in the field of the steel industry in the Arab region during the last years has set out from assuming an analytical vision seeing that the escalating movement in the steel markets in the countries of the region supports the thought that the region of the Middle East remains one of the best places at the world level for setting up steel mills. The year 2009 may not have the strength of hope seen in past years. However, continuation of a number of companies of implementing their expansion plans, in spite of the presence of other companies, now keeping waiting for implementing their expansions, is an evidence of the great vitality of this industry. Over the steel markets the slogan "Wait and See" has dominated, but the Arab steel industry, as it seems, has replaced this slogan by another one "Move and Wait". Through this slogan, it sees in the relative improvement of the situation of the markets a vital indicator making it think with the language of fighting for growth, not to survive only, even though it has lost some of its profits as a result of the decline of prices, because it has not lost the hope in its capability to pick up again. Arab Steel |
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