The Market

Middle East & North Africa Steel Market at a glance

The Middle East and North Africa (MENA) region is considered currently a key growth markets for the steel industry at the consumption and production alike due to the fast-expanding construction & fabrication sector. It has witnessed major transformations over the past years, as Arabian countries try to emerge from the shadows of the developed world and become more industry oriented.

Over the past couple of years, the steel industry worldwide has been experiencing stunning growth and the Middle East has flourished to become major players in the steel market. The real estate sector has been at the heart of the demand, as this sector witnessed tremendous activity. Consequently, steel companies in the MENA region entered 2008 strongly, pushed by their momentum and massive profits achieved in the previous year. In 2007, Egypt and Saudi Arabia ranked 27th and 35th, respectively, among the world’s steel producing countries. These positions reflect the substantial improvements that both countries underwent over the years to enhance their steel making capabilities.

Steel production in the MENA region has been steadily increasing over the past two decades to meet the Arab countries ever growing demand for steel. In 1990, total steel production in the Arab countries amounted to approximately 4mn tons. In 2008, steel produced by Arab countries in the Middle East and North Africa amounted to 15.5mn tons.

 Steel manufacturers in Arab countries are exerting efforts to integrate and consolidate their position in the face of a growing worldwide industry trend of mergers and acquisitions. There are 67 steel plants in the Arab region. The demand for steel is rising at five to six per cent every year. It is predicted that half of the world's steel production will be done in Arab countries by 2012 and Arab countries succeed in keep up with worldwide development in the steel industry.

The MENA region is considered to be among the top five locations in the world to establish a steel factory, due to a favorable environment and relatively cheap energy prices.

Facts and Opportunities:

-      By 2013, the regional finished product demand is forecast to grow to 85.5mn tons with raw steel production projected at over 50mn tons. This massive imbalance between supply and demand therefore means that the business opportunities for those involved in the region's steel sector is immense.

-      Middle East and Africa Oil and Gas Pipeline Industry outlook to reach $15bn by 2012.

-      New investments in the Arab's pipes, tubes and steel industries are expected to exceed by $20 billion between now and 2015.

-      The Middle East's construction sector is expected to grow at an annual rate of 3.5% through 2015, surpassing growth rates in the European and North American markets, , As more and more investment is poured into buildings, real estate and infrastructure developments

Egypt Steel Market is more promising

The Egyptian steel industry represents one of the cornerstones of Egypt’s economic growth and development, due to its linkages to almost all other industries that stimulate economic expansion. Steel is everywhere, in construction, housing, infrastructure, consumer goods and automotive, all rely heavily on the steel industry and so, the importance and development of the steel sector is imperative for the progress of the Egyptian economy in general.

Egypt is definitely playing a key role as a major producer of steel in the Middle East & North Africa. In addition to the rapid growth in population (now more than 88 million and rising at 2% per year) and in the economy, which gained 7% last year to achieve per capita GDP of $5400. Further to, in a ranking of 59 countries, "FDI Intelligence" ranks Egypt 2nd in Africa with regard to Foreign Direct Investment (FDI) in FY 2009/2010. This affected on the growing of the steel industry in Egypt.

 Egypt steel production is estimated with 6.22mn tons in 2008, reflecting the fast-expanding construction & fabrication sector. The consumption of steel in Egypt has been steadily rising over the past four years. In 2004, total consumption amounted to only 3.4mn tons and it started to gradually increase and in 2007, total consumption reached 5.2mn tons, then the consumption grew at 15.3% Y-o-Y in 2008. Egypt’s per capita consumption of steel in 2007 was about 69.2 kg, which was above the African average of 35.8 kg.

Highlights:

- Egypt's steel industry is bound to enter a fast developing period. It is expected to reach to 17 Million tons by 2015 with an economic growth rate 8%, especially after announcing the new 12 steel licenses offered by the Egyptian Industrial Development Authority.

The companies that got the new licenses are Ezz Steel, Sixth of October for Light Industries, Al Marakbi, IIC for Steel Plants Management, Port Said National Company for Steel and Al Ahram Steel, plus other Saudi and Turkish companies.

- Egypt's rapidly growing building and construction sector is expected to attract investments of around $7.3bn by 2015.

- Egypt’s oil and gas pipelines industry was growth by 17.5% in 2008/2009 compared to 8.3% the previous year.