Middle East steel investment appeal

An Expert's View about Metals, Metalworking, Glass and Minerals in the United Arab Emirates

Posted on: 31 Oct 2011

With the Gulf state of Qatar expected to spend up to US$100 billion over the next five years on infrastructure, there's expected to be ready demand for regional steel supplies; that will particularly support the building of stadia and other developments for the 2022 FIFA World Cup.
But there are other so-called "golden opportunities" to invest in steel companies and plants, given the expected demand in other states.
Saudi Arabia is expanding its portfolio for building and infrastructure, as is Bahrain.
Furthermore, according to analysts, steel is cheaper in the Middle East and North Africa region (MENA) than in any other part of the world. They say electricity is cheaper, manpower is cheaper and the location is sustainable.
Gulf countries also have a regional advantage for nearby resources, being no more than three hours from Africa, and little more than six to eight hours from Asia to complement cheaper labour and utility costs, say these analysts.
However, they believe Asian countries are paying a premium for Western imported steel that could be manufactured in the Middle East.
Some potential investors however presume a dislocation in the Middle East, due to the recent civil turmoil.
In fact, the Arabian Gulf region has largely been an importer of steel and other metals, with Turkey a particularly strong player that has undercut prices in certain markets.
This is despite the swift emergence of steel plants in Saudi Arabia, the UAE and Qatar, which are usually cited as the three biggest markets.
There are also aggressive expansion plans by companies such as Saudi Arabia's Zamil Steel and the UAE's Emirates Steel.
In another example, there was an announcement recently that the United Steel Company, a joint venture between steel producer and investment vehicle Gulf United Steel Holding Company (Foulath) and Japan's Yamato Kogyo had bought Saudi Arabia's United Gulf Steel Mill Company.

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Posted: 31 October 2011

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Expert Views    
Middle East steel investment appeal   By Hong Kong Trade Development Council (HKTDC)