2020 is a Difficult Year for the Global and Arab Iron and Steel Industry
The steel sector is the second largest sector after the petroleum sector and it is considered the engine of growth for all industries that contribute to providing thousands of direct and indirect job opportunities. It is a sector that is very vulnerable to all internal and external influences. Therefore, this sector always faces many challenges and directives, and the Arab iron and steel industry is not excluded. The difficult situation is the Coronavirus (Covid-19) pandemic that has struck the world and the drop in oil prices during 2020.
The period of the first wave of the Coronavirus pandemic is one of the most difficult periods that have passed for the steel industry in general and the Arab steel industry in particular, in which many factories decided to stop production and obligate many domestic workers.
The pandemic affected the volume of production in most countries of the world in varying proportions, but China broke the rule and its production increased by 5.2% and its production exceeded one billion tons for the first time and increased its share from 53.3% to 56.5% of the world’s production because it was the first country in which the Corona virus appeared and the first country to control This virus did not affect its production until March.
The numbers and evidence indicate that the steel industry in all its sectors, whether raw steel, billet, flat or even rebar, has witnessed a large decline since the beginning of the Corona pandemic, varied between a severe slowdown in the volume of demand or the volume of production with an unexpected rise in the prices of raw materials, as the Steel Union expected Global steel demand is to contract by -2.4%, to fall to 1725.1 million tons.
In 2020, the excess capacity in the world increased by 41.8 million tons, mainly supported by new production capacities that became available in the Middle East and Asia. The gap between global production and production capacities may reach 700 million tons in 2020, increasing for the first time since 2016, according to the Organization for Cooperation. Economic and development.
While production declined in most Arab countries, especially in the Gulf countries, as a result of the strict measures taken by the Gulf countries in light of the Corona pandemic and the decline in the volume of demand, especially in the construction sector, which is facing many crises, as economic shocks and low oil prices affected the demand for building materials, especially reinforcing steel. Which saw weak demand most of the year.
About 550 projects worth more than 60 billion have been postponed or canceled since March due to the Corona pandemic, and most of these projects are in Saudi Arabia and the United Arab Emirates, where contracts worth only $ 4.1 billion were awarded to Gulf countries in April, down 40% from last year.
In the UAE, the construction sector is expected to contract by 1.9% in 2020 against expectations of 4.3% growth before the Coronavirus pandemic.
The same clarity in the rest of the Arab countries, but with different influences, so we find in Egypt that the construction movement has stopped for a period of 6 months during the year 2020 with production stoppages, especially in the first wave of the pandemic with the rise in energy prices compared to the rest of the world.
Generally speaking, these factors have led to the suffering of rebar producers in the Arab countries, which is the main product of all companies, from lower demand with rising costs amid rising global raw material prices and pressure on producers to sell increasingly high-priced products in a negative demand environment.
But most of the short-term projections expect the construction sector to return to growth again next year, with expectations that the output will remain below pre-pandemic levels, but the desire of governments to re-build the pace of construction and simplify procedures may lead to the return of the construction sector to its normal rate.
The Arab Iron and Steel Union hopes that, with the end of a year ago, it may be one of the most difficult years that have passed in the global and Arab iron and steel industry, and indeed all of humanity during a century gone by, with all the harsh and painful repercussions it has had unprecedented in our contemporary life. We are preparing for a new year. We hope that It will be a year of good, stability and growth for the Arab countries, and the development and prosperity of the Arab iron and steel industry.
Dr. Kamel Djoudi