Steel prices worldwide drop by 10 percent; demand from GCC to grow six fold in five years

TeknoTube Arabia 2011 concludes

Oil & gas industry and expanding pipeline network will boost pipe industry in GCC

Steel prices worldwide drop by 10 percent; demand from GCC to grow six fold in five years

Dubai, UAE, 13th January, 2011: TeknoTube Arabia 2011, the 10th International Trade Fair for Industrial Machinery, Metalworking, Machine Tools, Dies/Molds, Tubes, and Pipes, concluded with the message that the booming oil and gas industry in the Gulf and the expanding pipeline network will boost the pipes industry six fold in the coming five years.
Tekno Tube Arabia 2011, which was running concurrently with ArabPlast, together attracted 18,680 visitors.

Jun Yao, General Manager, BAOSTEEL, a first time exhibitor in TeknoTube Arabia 2011, said: “Middle East constitutes 5 percent of our total business. We do $100 million dollars sales annually. In five years, the steel industry in the UAE will grow 10 percent in the GCC and North Africa region. As the largest steel provider in China and the third largest in the world, we are upbeat on this region. Price of steel, which were at its peak in 2007, have dropped by 10 percent.”
“There is a huge market for the Chinese companies in the Middle East and we are looking for agents from the region. Tubes and pipes manufactures from China are coming here to test the market,” Yao added.

Chinese participation in TeknoTube Arabia 2011 rose by 40 percent. Chinese tube and pipe industry competes with global industry by its sheer volume of production. Chinese companies can produce volumes faster than any other suppliers in the world.

The show urged Gulf's tubes, pipes and steel industries to enhance cooperation in logistic operations, human resources development and boost the competitive abilities of their products in the international markets. It will help increase cooperation between GCC nations and help them avoid harmful competition, especially during times of crisis and low demand.
Satish Khanna, General Manager, Al Fajer Information and Services said: “The Gulf has the largest concentration of energy resources in the world, with oil producing countries in the region estimated to have spent approximately AED 182.5 billion (US$50 billion) to increase their current oil production or on new explorations by the year-end.”
The event, which attracted a cross-section of the world's tube and pipe customers, is the oldest show in the region and is regarded as the ideal gateway to the extremely important Gulf and Middle East markets.

Khanna added: “The global demand for energy, infrastructure development, construction projects, water and air conditioning supply and automobiles - the key sectors that drive the tube and pipe industry -- will continue to grow in the coming years.”
Steel was a big highlight of the show. Khanna added: “GCC steel imports are in the region of US$ 8 billion, growing at 20 % CAGR. Steel represents a large portion of the GCC base metals industry, and there will be a production shortfall of 14 million tonnes by 2015. The value of the projects planned and underway in Iraq soared by 12.3 percent to reach US$ 182.6 billion.”

As far as tubes industry is concerned, the Middle East has witnessed the launch of a series of new tubes plants one of which is the Empower Logstor Insulated Pipes Systems (ELIPS), the UAE's largest pre-insulated pipe manufacturing facility, in Jebel Ali.
“As for the tube industry, the GCC and Middle East are proving to be increasingly attractive markets for international tube manufacturers. Some of the growth sectors include oil and gas technology, petrochemicals, water and electricity supply, drainage as well as construction. Huge investments by the government as well as private sector have been made in this sector and more are in the pipeline,” added Khanna.

Khanna added: “The present demand from Gulf countries for pipes and tubes is met through imports; however leading manufacturers of steel pipes and tubes in the Gulf region are looking at reducing the imports as much as possible through the production of millions of tonnes of tubes and pipes every year.”

The Middle East steel market today stands at a crossroads. For the first time in the region’s industrial history, steel production is coming close to meeting domestic demand. With the ramping up of production capacities in the UAE, Saudi Arabia, Egypt and Oman, steel users and fabricators now don’t have to rely much on imports from other regions.
With regard to seamless piping that is used heavily by the Oil and Gas sectors, JESCO in Saudi Arabia plans to produce 200,000 tons in 2011, with a total rolling and finishing capacity of 400,000 tons. Another major regional player, Al Jazeera Steel Products of Oman, has recently upped production capacity to 300,000 tons per year. With OCTG pipe consumption in the Middle East projected to be 1.2 million tons in 2011, these companies will play a significant role.

Other players like Zamil Industries and Al Mansoori from Saudi Arabia have 170,000 tons of finishing capacity. ArcelorMittal’s new seamless mill project in Saudi, with a capacity of 600,000 tons, is projected to start sometime in late 2012. However, imports from China, India and Europe will still account for more than 30 per cent of tube and pipe consumption in the GCC region in 2011.