AME expects the Middle East’s crude steel production for 2021 and 2022 to be 48Mt, up 8.3%, and 53.3Mt, up 11%, respectively, year on year.
With a specific focus on steel production in the
Gulf region (excluding Iran and Iraq) and the region’s close proximity to other
major steel-producing countries, the Gulf region is a potential growth area for
the green steel transition. Countries of the Gulf region include Bahrain,
Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (the UAE). These
six countries are members of the Gulf Cooperation Council (GCC), a regional,
intergovernmental political and economic union which oversees the region’s
economic development. The charter has a history dating back to 1981 and is advised
by the World Bank on various aspects of urban planning, education, investment,
energy and other areas.
AME’s crude steel
production forecast for GCC countries for 2021 and 2022 is 16.7Mt, up 18%, and
18.4Mt, up 10.3%, respectively, year on year. Moving forward, the long-term
average growth rate is forecast to be 2.8%. Supply levels in the GCC countries
have the potential to ramp up significantly, with approximately 11.3Mt of new
capacity planned for construction in the future.

GCC
countries’ economies are highly dependent on hydrocarbons. They are
consequently strongly affected by price shocks, and government revenue is
unstable. Prior to the Covid-19 pandemic, Bahrain was recovering from the oil
price shock of 2014. Its large tourism industry has disappeared in the wake of
the pandemic. Bahrain’s private investment and private development therefore
require strengthening.
Kuwait’s
economy is dominated by oil and domestic consumption. Hydrocarbons account for
85% of its fiscal revenue and 50% of its GDP. Kuwait is diversifying its
economy to rely less on this sector, but implementation of the New Kuwait 2035
Development Plan has been slow. The labour market in Kuwait is highly segmented,
with around 90% of its workforce employed in the public sector, meaning that
the pandemic did not impact most of its citizens. Oman has recently experienced
the twin shocks of Covid-19 and the oil price collapse of April-May 2020. Its
hydrocarbon sector accounts for approximately 41% of its GDP, and its large
tourism industry has virtually evaporated due to the pandemic. Oman currently
has four potential new steel projects planned, with a total of 3.3Mt in crude
steel capacity.
Qatar
is also strongly dependent on hydrocarbons and is the world’s third-largest gas
exporter. Its tourism industry is preparing for the December 2022 World Cup,
which is expected to strengthen its economy. Qatar Steel Company is the only
steel producer in the country, and at this stage there are no planned
expansions to its 3.2Mt crude steel capacity EAF. Saudi Arabia was also hit by
the twin shocks of Covid-19 and the 2020 oil price collapse. The country’s
economy is dominated by oil, although it has a long-term diversification plan,
Vision 2030, which commenced in 2016. Saudi Arabia has nine potential new steel
projects with total of 7Mt in crude steel capacity planned for the future.
The
United Arab Emirates (UAE) has seen an oversupply in its residential real
estate market, which has slumped for the past six years, with prices still down
by 35% from their peak in 2014,. Prices are now beginning to improve, with a
forecasted increase of 3% and 2.5% for 2021 and 2022, respectively. The UAE has
a large tourism industry, and the government has a long-term priority of
diversification away from hydrocarbons and towards global trade, finance and
the establishment of the country as a travel hub. Saudi Arabia has one
potential new steel project, with 1Mt crude steel capacity, planned for the
future.
Start Stop Capacity
Atoun
Steel Industries Company originally planned to construct a new EAF and DRI
steelmaking facility in Yanbu, Al Medina, Saudi Arabia. Construction the EAF,
with crude steel capacity of 0.91Mt, commenced several years ago and was originally
planned for commissioning in 2017, with investment of US$266m. However, the
project has since been delayed, and no further announcements have been provided
by the company. The DRI plant will have capacity of 1.2Mt, and a rebar mill
with capacity of 0.5Mt.
Sulb
National Company began the construction of an EAF steelmaking facility with
crude steel capacity of 0.3Mt in Rabigh, Saudi Arabia, in 2012. The project has
experienced multiple delays and is still under construction. Investment was
US$221m, with plans for the facility to produce steel billets with capacity of
0.3Mt for re-rollers within the country. The initial plans also included phase
2 construction, which was intended to double the plant’s crude steel capacity
to 0.6Mt. No further details have been provided by the company with regard to
commissioning dates.
Sun
Metals plans to construct a 2.5Mt crude steel capacity EAF in Sur, Oman. The
original plans were for construction and commission in 2014 and 2017,
respectively, with investment of US$400m. However, these plans have been on
hold since 2016 due to unfavourable economic conditions. Rolling facilities
would include both a bar mill and a sections mill with capacity of 1.2Mt and
1.1Mt, respectively. The project also includes a DRI plant and scrap metal
facility for the manufacture of special steel and rebars for the local Oman
market, with the remainder to be exported.
New
Projects: Saudi Arabia, Oman, and the UAE
Other
future projects in Saudi Arabia include those planned by Al-Tuwairqi Group,
Solb Steel, and Al-Yamanah Steel Industries, with crude steel capacity of 2Mt,
1Mt and 1Mt, respectively. Some other future projects in Oman include those
planned by Raysut Steel Industries and Muscat Steel Industries, with EAF crude
steel capacity of 0.4Mt and 0.2Mt, respectively. The UAE has one potential
project planned by Abu Dhabi National Co for Building Materials (BILDCO), with
EAF crude steel capacity of 1Mt.
Overall, Saudi Arabia, Oman and the UAE have projects planned with
approximate crude steel capacity of 7Mt, 3.3Mt and 1Mt, respectively. For the
most part, the respective companies have not provided any construction start
dates or commission dates. However, Madina Metals is currently constructing a
new EAF, with crude steel capacity of 0.3Mt, in Saudi Arabia. It is expected to
commission by the March quarter of 2022. Meanwhile, Hadid Majan LLC has plans
to construct a new 0.18Mt EAF in Oman, with expected commissioning in 2024.
Atoun Steel Industry and Solb Steel are planning DRI projects with capacity of
1.2Mt and 2.6Mt, respectively.

The dependence of GCC countries’ economies on
hydrocarbon and tourism has left these countries susceptible to oil price
shocks and with unstable government revenues. GCC countries are acutely aware
of the vulnerabilities of having a single sector, such has hydrocarbons, driving
their economies. Moving forward, these countries have long-term plans to
diversity their economies. To date, however, the implementation of these plans
has been slow. In the past, new steel projects in the Gulf region have often
had a ‘start stop’ nature, with some projects which started in 2014 yet to be
commissioned.