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Construction Boom Drives Steel Prices in Emerging Markets |
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administrator |
DATE |
2008-09-10 09:09:20 |
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Construction Boom Drives Steel Prices in Emerging Markets
9 September 2008
DUBAI - In the last 12 months, global steel prices have increased by 100 per cent and now range from around $1,000 to $1,500 per tonne reports Balli Steel, a leading global steel trader handling sales of over $1.3 billion per annum. Balli Steel highlights that global annualised steel production has reached a record 1.4 billion tonnes, up from 800 million tonnes in 2000.
Balli Steel indicates that global demand is for two types of steel products: construction steel - beams, bars and mesh, used for infrastructure projects, offices, housing and leisure facilities - and industrial steel - used for manufacturing items such as automobiles, ships and pipes. Balli Steel reveals that the construction activity in emerging markets including China, the Middle East and Brazil, has been driving the price of steel over the past few years. Looking forward, Balli Steel calculates that there will be continued buoyancy and capacity constraints for steel in the oil, shipbuilding and gas industries. Balli Steel also highlights the tremendous growth opportunities in emerging markets which now account for over 75 per cent of global steel consumption.
Balli Steel reveals that China now dominates the world’s steel market, accounting for 45 per cent of global steel consumption, up from just 30 per cent 10 years ago. The company highlights that China has also emerged as a leading steel producer, and calculates that Chinese steel production will reach 550 million tonnes in 2008, up from approximately 200 million in 2000. China has become a leading exporter of steel, joining the ranks of the EU and Japan, with exports exceeding 20 million tonnes.
Balli Steel stresses that the Middle East is a strong market for the steel industry, with the market growing at a rate of 3.2 per cent per annum, one of the fastest in the world. In 2001 construction steel in the Middle East was priced at just $200 per tonne, but in 2008 it has peaked at $1,550 per tonne, with a particularly strong price surge of some $650 per tonne during the first half of 2008. The majority of the demand is for construction steel, required to help build the property mega projects such as The Palm Jumeriah, the Burj Dubai and Dubai Marina.
In the first half of 2008, Balli Steel supplied almost 1 million tonnes of steel to the Middle East region, and whilst the company does not anticipate further cost pressures on the Middle East construction industry and the UAE in particular, since developers have now priced steel and other construction commodity prices into their forward development plans, Balli Steel does anticipate a continuing healthy demand for steel until 2012 due the construction boom in the region.
Balli Steel observes that whilst the Dubai property market has grown significantly and emerged well ahead of other property markets in the region, the next 5 years will see the rapid growth of new property markets in Saudi Arabia, Qatar and Abu Dhabi.
For example, Balli Steel highlights that Saudi Arabia has not commenced construction on any of its major masterplan projects, which will add some 500 million tonnes per annum to the country’s steel requirement over the next 3 years alone. India will be one of the world’s fastest growing economies and producers of steel over the next 7 years. The country currently accounts for 50 million tonnes of steel, and Balli Steel calculates that this will double to 100 million tonnes by 2015, driven by a huge demand for industrial steel as consumers in the emerging Indian middle and upper classes enjoy their new-found wealth and purchase cars, yachts, motor bikes and other lifestyle products. Europe, which accounts for some 17 per cent of global steel consumption, has been growing at a steady rate of 2 per cent per annum. Balli Steel reveals that the steel markets in the southern European states such as Italy, Greece and Turkey, are driven by a demand for construction steel, whilst the northern European countries such as Germany, Denmark and the UK are dominated by a demand for industrial steel products.
In summary, The future of the steel industry will remain one of growth. More than half of the world’s steel consumption has occurred since 1980 and production is forecast to reach 1.2 billion tonnes by 2020.
3% The Middle East is a strong market for the steel industry, with growth rate of 3.2 per cent per annum, one of the fastest in the world.
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