Middle East at the heart of surge in steel production

Huge infrastructure spending in the Middle East is driving strong demand for steel and fuelling investment in steel projects.

Crude steel production in the Middle East has doubled from 10 million tonnes in 2000, to 20 million last year, at an annual growth rate of about 6 per cent, according to an analysis of the industry by Frost & Sullivan, the international research company.

At the same time, production throughout the Middle East and North Africa (Mena) region has increased from 15 million tonnes in 2000 to more than 28 million by the end of last year, a rise of 5.2 per cent, as the region's production hubs have shifted from their traditional centres in Iran and Egypt, with the GCC countries emerging as the leading steel producers.

Leading the demand are robust construction and infrastructure developments in the GCC with potential growing markets in sectors including oil and gas.

Demand is now more than 27.3 million tonnes, making the region a net importer of iron and steel products. Imports of iron and steel products into the GCC countries reached US$8 billion (Dh29.38bn) last year, according to the analysis.

The value of projects planned and under way in the UAE dropped 1.4 per cent to $539bn as nine projects worth a total of $2.1bn were completed and five projects worth $6bn were placed on hold or declared inactive.

"In the Middle East, the GCC in particular, provides a cost-effective platform for international companies to expand their operations to new geographical locations," said the Frost & Sullivan report.

The Mena steel industry is looking for long-term sustainable supply of iron ore. The GCC alone imports more than 30 million tonnes of iron ore a year.

The world's largest producer of iron ore, the Brazilian resources giant Vale, has invested heavily in establishing a presence in the Middle East. Last year, it opened a production and distribution centre for iron pellets in Sohar, Oman, with an investment of $1.36bn.