The year 2009, or let׳s say most of it, has passed while the steel industry looks with one worried eye at the present and with the other at what will come. Perhaps this year is one of those years which have passed during this decade fraught with different attitudes. Some people like to cut short the end of this year in the hope that the crisis that hit the world markets has become a thing of the past, while others are afraid that the coming year holds in store new crises that shall remind us of 2009.
Regardless of whether 2009, the fourth quarter of it in particular, has made us believe that the crisis, through which many industries including the iron and steel industry, has become something of the past, it has proved, at the same time, the ability of the steel industry to face the crisis and adapt to the new circumstances it imposed. This is not applicable only at production level, but also at demand and price levels, a thing that would entail reflection over some of the key stations at which the industry passed during 2009. These key stations are:
Defying the crisis. Companies that proved able to sustain their existing projects up until they reach production phase adopted this method. These companies have came from their conviction that this manifests the dynamic way out of crisis. Many arab companies adopted this method, the most prominent of which is emirates for steel industries (esi) which has completed a number of its projects and signed contracts for new ones listed on the company׳s expansion plan.
Facing crisis through adaptation with the market circumstances and conditions. Some markets have resorted to putting a hold on some of its products that were facing a slowdown in both domestic and global markets. Yet, that did not mean they stopped looking for substitutes or new projects needed in the domestic market. Ezzsteel adopted that dynamic method when it decided to stop its production of flats in the suez steel mill. However, ezzsteel tried to take advantage of the downtime for flats by starting new projects for rolling long products and producing crude steel, within a framework of vertical integration so that the new projects will be ready to launch in due time and according to market requirements.
Facing the crisis through reconsidering investment in more-efficientlocal markets. In addition, canceling some of the measures taken at an earlier time, such as imposing restrictions or ban on exports took place. These measures are but procedures imposed earlier by the conditions of increasing local market demand. Nevertheless, the change in the volume of demand created new conditions that entailed new measures aiming at supporting exports.
Priority for demand, not for price. Steel industry has been one of the leading industries that could adapt to the market conditions in terms of prices. Thus, producers decided on their own to cut prices down, a thing which has underpinned the positive producer/consumers relationship and corrected the negative image of steel industry accused of only seeking to profit. Despite the fact that steel products prices have fallen more than 60% during 2009, producers kept their production on to meet market demand regardless of the profit margin, as the target has often been achieving a cost/profit balance.
Focus on local markets. Most arab companies have adopted this policy, a thing which has driven some companies to keep their production at the same level of previous year, even ramping it up in some cases to satisfy market needs. Saudi hadeed company increased its production during the first nine months of this year compared to the same period of 2008, and most companies also increased their sales during 2009, a thing reflected in a local demand growth situation.
On the other hand, arab steel companies have faced a huge increase of imports entering their markets, having their peak in algerian and egyptian markets. That imports surge, particularly in egypt, resulted in anti-dumping complaints to rise and the calls for imposing protectionist duties to arise.
The year 2009 as a whole was the year of rapid changes for arab as well as global steel markets. While most world markets faced a state of strong recession in demand, arab steel markets, alongside some other global markets such as china and india, have maintained their vitality and remained a destination for exporters to compete over. However, the question that needs to be addressed now is: 2009 has passed, how will 2010 be?
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