Dubai – George Matta, Chairperson of the Economic Committee of the Arab Iron and Steel Union, outlined seven challenges facing the iron industry in the Middle East and North Africa (MENA) region.
He told journalists on the sidelines of the Steel Summit in the Middle East, which was held in Dubai for two days, that the first challenge is Arab governments postponing projects and cancelling others after the fall of oil prices, given that 70% of production input in Arab states are manufactured from petroleum products. These countries include Libya, Iraq, and Egypt, in addition to the Gulf countries.
The second challenge, according to Matta, is the decrease in industrial output in the Arab region from 2% in 2018 to. 0.6% in 2019 which negatively affected the volume of projects that were implemented in the region, and hence, iron consumption.
The third challenge, he said, is the spread of protectionism in major export markets, such as the United States and the European Union, which creates a kind of unfair competition with low-priced imports due to the lack of customs barriers that limit imports, while the rest of the countries believe in their right to protect local industries through customs duties.
The low rate of utilisation of productive energies is the fourth challenge, as Matta says, explaining that the actual production volume does not exceed 33m tonnes while the available capacity reaches 74m tonnes, and “despite these surplus energies, there is an import that ranges from 10 to 11m tonnes and is a quarter of domestic consumption.
The fifth challenge is represented in the political turmoil in the region, which negatively affects the steel industry and consumption. “There is still hope for plans to rebuild the countries of Iraq, Libya, Yemen, and Lebanon and to inject new investments into the Algerian market after the election of a new president,” Matta says. In addition, the seventh challenge is caused by the construction projects happening in the Gulf as the World Cup 2020 approaches, the UAE organising the Dubai Expo, and Suadisation causing 2 million workers into Saudi Arabia, have all lead to low demand for iron in the region, which makes the sixth challenges.
“These challenges led to the Arab region entering a deflationary phase, and the only exceptions are Egypt and Morocco, where Egypt is expected to maintain its average iron consumption, which is 10m tonnes of iron (7.5 million tonnes for rebar, 1.3 for flats and other types),” he said.
Matta expected that there would be some positive developments in the region, especially with the start of work on the Dabaa nuclear project next year, while continuing to implement national projects in Egypt and with the expectation of a net decrease in the interest rate in 2020 with a reduction in gas prices, which reduces the pressure on manufacturers.