Iron and steel: Trade and industry in GCC member states

This industry lays the pillar for heavy industries as well as the base for manufacturing. In addition, this industry creates a sort of front and back intersectional relationship between the different industrial and economic sectors. Being so, this iron and steel industry has become today an important model for identifying the progress and development levels of societies to the extent that the average of individual consumption of iron and steel is considered amongst the important indicators of measuring the degree of countries' development.

GCC member states exerted great efforts to develop iron and steel industry since the setup of the first factory to produce iron bars in Jeddah, KSA in 1966. This industry witnessed many developments especially during the last few years. The number of working factories in GCC member states reached 45 producing basic iron and steel products covering iron bars, flats, special shapes, angles and casting. Half of those factories are located in KSA, while others are distributed on other GCC member states. The investment value of those factories reaches some USD 2.8 millions, and over 11.6 workmen.

The growth of manufactured metal products also leaped. This industry depends, one way or another, on iron and steel basic or intermediate products in manufacturing. It includes a number of industrial activities; most important are: metal furniture, construction, spare parts, heating and cooling machines, cars frames and supplies, etc.

The number of products manufactured from steel and iron in GCC member states reached some 125 in 2005. Their investment cost was over USD 6.5 billions, and 136,000 workmen.

GCC member states currently witness a rapid movement to develop iron and steel industry. There are many expansion projects currently taking place. Furthermore, governments adopted ambitious plans to setup new ventures to meet the rapid growth in the constructions sector, the establishment of huge infrastructure projects, as well as large residential, commercial and tourism complexes.

It is expected that the GCC member states become one of the important world centers for producing iron and steel in the region within the few coming years, despite the limited contribution of this industry in the global production as it only constitutes about 1%. Despite this fact, the GCC member states are considered among the most consuming groups of iron and steel products at the individual level reaching over 378 kg of steel per person annually, while the individual consumption per person at the world level is 182 kg.

In addition, it is expected that the local market continues the revival state as well as the increase in iron and steel products' demand as a result of the huge constructional projects; as such this requires the GCC member states to exert more efforts to reinforce its position in this important industry, whether at local market level or to compete at external markets. Doing so will create a motivation to direct the private sector as well as the financing banks and funds towards more local and foreign investment in this industry; as the cost of the planned projects in iron and steel industry is estimated to over US D 5 millions in the coming three years.

The mentioned tendencies are promoted by two major factors: first, the increase in demand on basic iron and steel products which are expected to increase from 15 million tons in 2005 to around 19.7 million tons in 2008; and second comes the escalation of investment in this strategic industry with its diversified usages.