Arab Steel Editor: 2004 was an exceptional year for the Arab steel companies. It was the first time that most of the companies, in particular the integrated companies, had achieved good profits in spite of the high costs of the inputs which affected the levels of profitability compared to losses which had taken place in previous years. It was also the first time for more than two decades at which we find investors and really existing companies making a race with time to enter into implementation of new projects or into expansions of the existing projects.
During this year the steel industry looked, among most industries, the most attractive for new investments. Certainly this was possible owing to the availability of financing resulting from improvement of the returns of oil and gas. These returns had resulted in the recovery of the economies of the Arab region, especially in the Arab oil countries, but the factor which, in our estimation, is not less important was the improvement taking place in the results of the activities of the steel companies themselves which allocated a portion of the results of their activities to effect new improvements. Thus it can be said that the steel industry has become self-financing instead of the entire reliance on the other financing sources.
The more the process of entry into new projects constituted a race with time for the Arab companies, the more it also constituted a race with the world companies to get successful in implementing the maximum number of these projects. However, it is evident that most of the world companies, and as a result of the long standing experience with the Arab steel companies, have become at the same time suppliers of technologies to these companies and a partner for them in the process of the development of this industry in the Arab region which is considered one of the most attractive regions for new projects at the world level.
The new projects and expansions attracted the attention and competition of the major world companies. Danielli was awarded a number of projects relating to setting up new electrical steel mills to produce steel billets in Qatar Iron and Steel Company (adding 600 thousand tons to the production capacity by setting up a melting shop and a continuous casting unit), Al-Rajihi Company in Saudi Arabia ( a new mill with a capacity of 850 thousand tpy of billets), the National Iron and Steel Company (SONASID) in Morocco (750 thousand tpy) and the Saudi Iron and Steel Company (Hadeed) ( a new rolling mill for reinforcing bars and wire rods with a production capacity of 500 thousand tpy) Saudi Yamama Company ( 600 thousand tons of reinforcing steel). Voest Alpine Company was awarded two contracts by the Saudi Iron and Steel Company, one to expand flats production up to 2 million tpy and the other to supply the company with a Midrex DRI mill with a capacity of 1.75 million tpy, which is considered the largest one at the world level. Voest Alpine also got a contract from the United Iron and Steel Company in Abu Dhabi (United Arab Emirates) to set up a unit for rolling sections with a capacity of 300 thousand tpy. This company also won two contracts to upgrade the billets casting units and the blooms units formed in the Libyan Iron and Steel Company. SMS got an order for expanding the hot-rolling mill in the Saudi Iron and Steel Company which they had already set up in 1999. Techint Technologies got an order for the supply of a washing Beam Furnace with a capacity of 220 tons/ hour to upgrade the present unit in Saudi Hadeed Company delivered by Techint Technologies in 1996. There are also some other world companies which got a role, though partial, in these new projects or in expanding the existing units.
What may be noted in regard to these expansions and new projects are several matters at the head of which are the following:
- Most of these projects have concentrated on production of steel squares with the aim of covering the deficiency of demand for this product, as it is notable that concentration in the field of projects in the past years was on setting up rolling mills, especially in the field of long products.
- Arranging for expansion of the production capacity in the field of flat products either to satisfy the requirements of the domestic market or aiming at export. Demand for the flat products in the world market will remain strong and constitute a bigger share in the world exports markets.
- The modern technologies have acquired the attention of the Arab steel companies which have become to concentrate on getting the most modern equipment arrived at by the world companies in order to realize a bigger competitiveness in the world market.
- Most of these projects and expansions, mainly concentrated in the Arabian Gulf region, will enter the production stage within the next few years, meaning that the steel industry will witness a noticeable development within the years 2005 – 2007.
- There are many expansions and new projects expected to be contracted on during 2005. These expansions and projects will also concentrate on the direct reduction iron and the hot briquetted iron as well as on production of billets with the aim to satisfy the requirements of this product. It is expected to see these projects making their way for signature in Qatar, Muskat, Kuwait and the United Arab Emirates during this year.
- There are some expansions in the field of steel pellets production in Bahrain. The Gulf Industrial Investment Company (GIIC) is planning to double the production capacity from 4.6 million tpy up to 9.1 million tpy in 2008.
- There is also a project for the steel pellets in Mauritania which is still under study. The first stage of the study of this project has been completed now in co-operation with the Australian side.
All these projects totally reflect the volume of the new projects which will enter this industry within a limited number of years. They also reflect the aspect of competition to enter the field of this industry instead of the fear which was dominating investors when they think of entering the fields of this industry in the past. All these projects the most of which are new will constitute a new and important addition to the present steel capacities, which will strengthen the position of the Arab steel industry both regionally and internationally.
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Arab Steel Industry 2004: Year of New Projects and Investments