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Challenges of Arab Steel Industry in 2020

Challenges of Arab Steel Industry in 2020



Arab steel industry has witnessed many challenges in the past few years that have proven its ability to survive and continue and confirm its presence to face difficulties.



Whoever works in this industry realizes that the strength of the steel industry lies in its ability to survive and accept the challenge.



It may be more important for steel producers to know what will be the conditions of steel markets during the coming period, where some fear changes that affect the steel industry.



Although there is general agreement between analysts that there is no rule for determining the state of the market from the rise and fall in the near or far future, however, producers see the rise in prices as an expression of the state of the market recovery and thus the steel industry recovery, while traders see lower prices as a good opportunity to reduce the costs arising from steel price changes.



When any study is conducted on the iron and steel industry in the world, we find that China is the largest common factor for the steel industry in the world as it is the largest steel producer in the world and accounts for 50% of steel products, which has increased the importance of China more the emergence of the Corona virus, which caused disruption and slowing movement or air and sea transportation,



Also, many Chinese factories were closed, causing the decline in the production of companies that depend on Chinese products. Some countries canceled import contracts from Chinese for fear of the virus transmission, as the China Trade Development Authority announced that some importers of Chinese mineral products stopped accepting shipments from China in the background of the emergence crisis. Corona virus, while others seek compensation due to late delivery.



The Minerals Trade Council of the Chinese Council for the Promotion of International Trade said that some companies in countries including Russia, Turkey and the MENA region have informed Chinese suppliers that they will not receive or that they are seeking to suspend purchases.



It is difficult to know the impact of this on It is difficult to know the impact of this on the global economy in the long run, but it is expected that Chinese economic growth will decrease from last year and global economic growth will be less than expected.



The Arab countries were not far from those repercussions caused by the Corona virus, as it reduced air and maritime transport movement between Arab countries after the emergence of this virus to work the necessary protection to limit the spread of the virus, which may cause a decline in production during the first quarter of 2020, an extension for 2019 that witnessed a decline In the production of most of the Arab countries due to the increase in inventory in light of the economic recession and the decline in oil prices, which affected the investments of the Arab countries, especially the oil-producing countries in infrastructure, construction and construction projects, accompanied by a decrease in the volume of demand for steel products in 2019 as the marginal industry faced The Arab steel big wave of decline in demand with an increase in the size of the supply, making some companies resort to reduce prices and provide incentives to distributors.



Expectations of economic growth rates in the Arab countries decreased to 0.6% after it was 1.5% in 2018 daespite the rise in some Arab countries, especially in North African countries. 



The main reason for this decline is due to the low oil prices and the exceptional political conditions experienced by some Arab countries.



But it is expected that the year 2020 will be better than the year 2019, driven by economic reforms undertaken by many countries led by North African countries, Egypt, Algeria and Morocco.



Whatever the case with the global steel markets, the situation of the Arab steel industry will continue to be governed by the economic conditions of the Arab countries and the rate of growth of the construction sector and the steel industry in the Arab countries will continue to look with optimism as a result of national investments made by investors in the Arab countries and with the challenges coming from overseas markets, especially After the countries recover from the Corona virus, especially China, which will seek to compensate for what it has missed during the months of the virus’s spread and the return of transport traffic to its normal state.



Arab Iron and Steel Union hopes that the year 2020 will herald the iron and steel industry and achieve the goals sought by steel producers in the Arab countries.



Dr. Kamel Djoudi