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Steel Demand in Kingdom Projected to Rise 8% in 2010
Apr 06, 2010

With an increase in steel consumption, the demand for steel in the major exporter of oil, Saudi Arabia is expected to increase.

According to Saudi Arabian Basic Industries (SABIC), with the steel consumption nearing 6.4 Million Tonnes, its demand this year is expected to rise by 8% in the leading exporter country, Saudi Arabia, as per the news published by Reuters.

The rise in consumption of steel in the Saudi steel market is motivated by the improved demand for residential, commercial and industrial development. Saudi Arabia’s huge and growing local population, together with various industrial projects funded by the government, is greatly benefiting the property market. According to the reports, the Saudi government, by 2013, will expend $ 400 Billion from the oil revenues so as to construct new schools, universities and railways, and develop the infrastructure.

Besides this, depicting a 16% increase from 2009, Saudi’s 2010 budget includes an outstanding USD 69.3 Billion for already existing and new infrastructure projects in construction, power generation and transportation.

The diversion of Saudi’s oil revenue toward infrastructure building and construction plus liberalization of the country’s real estate sector has significantly resulted in a soaring demand for rebar. Rebar is basically a steel bar which is generally used in reinforced concrete.

The steel production capability of Saudi Arabia stands at around 8.4 Million Tonnes, and as a result of tight supply in the indigenous market and a rise in demand, concerned authorities have to enforce limitation on exports of the commodity as well as the scrap metal.

Hence, the world’s largest exporter of oil, Saudi Arabia, will increase its indigenous steel production capability in order to meet the levels of rising demand. Within the coming three years, i.e. till 2010, steel producers in the Kingdom plan to amplify their capacity to produce steel by almost 50%.

According to a Research Analyst at RNCOS, “As the steel producers stacked up high inventories in the course of the demand slowdown last year (2009), steel production capacities are still below their 2007 and 2008 levels, and demand for steel in the Kingdom is mounting. The rising demand for steel will induce the manufacturers to return to standard production capacities. However, at the same time, continuous increase in demand for steel will also motivate steel producers to increase steel prices in the Kingdom.”

Related Market Research Reports:
Indian Steel Industry Outlook to 2012
US Steel Industry Outlook
European Aluminium Market Analysis