Saudi Arabia
represents one of the fastest growing steel industries
in the Middle East. Over the past few years, the rapid
economic development has led to skyrocketing growth in
the construction and infrastructure industry, which has
boosted steel demand in the country and caught the
attention of global steel giants.
Saudi Arabia
steel consumption has rapidly surged over the past few
years on the back of construction boom, growing
investment
in real estate and cheap & reliable gas/energy supply.
Economic growth has also contributed substantially to
raise domestic steel consumption by accelerating
business activities. In fact, the impact of economic
slowdown on the real estate projects was minimal. Out of
the total real estate projects worth US$ 543 Billion,
mere 4% have been cancelled or delayed. Hence, all these
factors have fueled the consumption of iron and steel in
the Kingdom to reach around 14.8 Million Metric Tons in
2009. The steel consumption in the Kingdom will grow
10.5% CAGR during 2010-2013.
At present,
the steel industry in Saudi Arabia is highly import
oriented. In 2008, the Kingdom imported around 6.3
Million Metric Tons of steel which accounted for
majority of domestic steel consumption. However, the
situation is expected to reverse in future with the
escalation of domestic production. The share of imported
steel will see a downward trend in coming years as
several major capacity expansion plans of manufacturers
under pipeline.
The factors
which will drive growth in Saudi Arabia's steel industry
during the forecast period. The increase real estate
projects in different parts of the country are currently
the key boosters, and this trend coupled with government
initiatives will play a greater role in promoting
reforms and increasing competitiveness.
The amount
of steel that a country consumes is considered as one of
the benchmark for measuring the degree of economic
growth the country has witnessed. Over the past few
years, Saudi Arabia has become one of the fastest steel
producing and consuming nation in the Middle East
region.
Known for
its richness in petroleum resources, Middle East region
is now emerging as a strong contender for steel industry
as not only government-backed projects but also
independents have been heavily investing in the steel
capacities that is poised to change the recognition of
the region from oil pocket to steel hub in coming years.
Saudi Arabia's $385 billion construction boom
Saudi Arabia
comprises the largest construction market in the whole
of the Middle East with multi-billion dollar projects
under way and many more in the planning stage by both
the public and private sectors.
In 2009, it
has invested on the infrastructure and public sector
building $80 billion with planned spending $385 billion
between 2011- 2015. Plans include building 600 new
factories, schools, doubling desalination capacity,
increasing electrical generation and distribution. Some
600,000 new homes are to be built in the next four years
with many more planned.
The growth
is primarily likely to be led by residential development
and mixed use projects apart from infrastructure
projects fuelled by the large demand supply gap in the
residential segment and the large disposable incomes of
the predominantly native and largely urbanizing young
population of the Kingdom.
Oil and
Gas Continues to be the Pivotal Industry
The world’s
largest producer of oil and an important world player in
natural gas, with an oil output of nearly 8 million
barrels per day and holding gas reserves of up to 230
trillion cubic feet as of 2010, Saudi Arabia continues
to be a dominant player in the world oil and gas markets
in spite of its efforts to diversify and encourage
greater contributions of other sectors to its GDP.
As of 2010,
the oil and gas sector contributed nearly half of the
country’s GDP. Due to its strategic importance not only
in funding its ambitious diversification programmes, but
also its role in regulating global oil prices, this
sector continues to be dominated by government owned
corporations. While the government has plans to spend
nearly US$400 billion in various oil and gas projects
across the kingdom, it also aims to attract global
investment in the sector to the tune of US$1 trillion
over a period of fifteen to twenty years in bolstering
this cash rich sector. The estimated value of
construction contracts expected to be awarded in the oil
and gas sector between the years 2008 – 2013 in Saudi
Arabia is valued at over US$ 108 billion. However, high
regulations and fluctuating oil prices continue to be
the key challenges towards the government achieving
these goals.
Saudi
Arabia accounts for 75% of GCC petrochemical production
Petrochemical industry is the second largest industry in
Saudi Arabia. In recent years investment in
petrochemicals have increased aiming to exploit the
great potential of the sector. There were large players
in this sector for decades, such as the state owned
Saudi Aramco and the Saudi Basic Industries Corporation
(SABIC). These companies are ranked among the world's
largest petrochemical producers. In Saudi Arabia there
are large proven deposits of hydrocarbons, chemical
compounds, ethylene and propylene, benzene and xylene
isomers that gives great prospects to the country and
the region industrially.
The Middle
East is probably the most important influence on the
global petrochemical industry and Saudi Arabia accounts
75% of GCC petrochemical production, A major part is
exported and it is mainly concentrated in the industrial
cities of Jubail and Yanbu. The Kingdom’s petrochemical
industry enjoys a natural competitive advantage due to
the availability of low cost feedstock on account of
vast crude oil and natural gas resources.
A Big Business Opportunities awaits you at
Metal & Steel Saudi Arabia 2012
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