Arab steel industry in the light of the Coronavirus pandemic
These days, Arab countries have been subjected to two major shocks, the first of which is the Coronavirus (Covid-19) pandemic, like the rest of the world, in addition to the drop in petrol prices, which led to economic turmoil in the region and expectations of a significant decline in economic growth in 2020.
The responses of Arab countries have been quick in facing the crisis, as they have taken measures to protect lives, contain the spread of the virus, support severely affected sectors, especially in the field of public health, and strengthen the infrastructure in the field of health care.
Countries have also taken several measures at the level of public finances, including measures at the level of revenues and expenditures, amounting to an average of 3.8% of the gross domestic product.
Central banks also provided direct support in the field of liquidity, with an average of 3.4% of GDP.
The industrial sector, whether internationally, regionally or locally, had a large share of these losses, especially in the light of the long periods of curfews and the reduction of the number of workers present in the factories to prevent infection and the shrinking of global trade.
The steel sector came at the forefront of those industries and the most effected, noting that dozens of other industries rely on it, such as construction, building and construction, cars, aeroplanes, ships, railways and others.
The evidence and figures indicate that the steel sector, in all its sectors, whether raw steel, billet, flat or even rebar, has witnessed since the beginning of the Coronavirus outbreak a great setback, its manifestations were varied between a severe slowdown in the disposal of production or perhaps reached the point of stopping some small factories as a result of a noticeable decline in sales.
The recession hit all factories without exception, whether integrated or semi-integrated factories or rolling factories, as a result of the suspension of all projects except the mega government projects.
The steel industry has been affected regionally and globally, as we find at the general level in China, where the virus began to spread, that crude steel production decreased only by 1.5% in March, then it increased by 2.0% in April due to the strict measures taken by the state.
The Chinese government announced that all the government factories had returned to work. Due to the slowdown in the international trade, China has a stock of 55 million tonnes, which may lead to flooding the world markets when the global trade returns to the normal pace after containing the Coronavirus spread.
As for the level of the Arab countries, things differed according to different procedures. However, the Arab companies were keen to continue operating under strict health and security conditions, with the closure of facilities and social attachments to the factories, as the companies reduced the number of employees present in the production units to the strict minimum, and transferred all the administrative work to homes.
Steel production declined in all Arab countries after the impact of the Coronavirus pandemic in March. In April, the State of Qatar and the United Arab Emirates production declined by a large rate to reach more than 70% and 55%,respectively, due to the decline in oil prices, the curfew and the return of foreign workers to their homelands. However, in the recent period, Egypt exceeded 15% after the government lowered gas prices to 4.5 dollars and did not reduce the protectionist duties imposed last year, which were to be reduced in April to encourage factories to produce, but not at its usual capacity. As for Saudi Arabia, it decreased its production by 6%, the Kingdom has taken severe austerity measures as a result of the decline in oil prices in the light of the Coronavirus pandemic, with the increase in value-added tax to 15%.
The production has almost stopped in the State of Kuwait as a result of the total ban imposed by the government. As for Libya, the working hours of the Libyan Iron and Steel Company reached three hours per day.
The Arab Iron and Steel Union expects the situation to gradually improve in July, after the embargo measures against countries retreat, the resumption of some government projects and the stability of oil prices. The Union wishes for a benign return to all-steel industry activities to lead the rest of the industries in the Arab countries for further progress and advancement.
Dr. Kamel Djoudi