SABIC sees steel demand improving in 2016, 2017

Demand for steel within the Middle East has started to pick up and should improve further in 2016 and 2017, Khaled Al-Hajeri, director of Saudi Basic Industries Corp.’s (SABIC) metals special business unit told Middle East Economic Digest (MEED) on Sunday.

“Many projects in the oil and gas sector have already been stopped or delayed. We noticed that in 2014 and 2015,” Al-Hajeri said, referring the effect of low oil prices on the market. “But in the last part of 2015 things started to pick up again and we expect to be in better shape in 2017. The market and demand have started to improve.”

Al-Hajeri remained confident that activity within the construction market would also improve. The sector accounts for 90 percent of steel use in the region.

However, an increase in imports from Chinese steel producers has caused oversupply within the GCC, keeping product prices under pressure.

“There is an open market, but you have to have regulations to ensure good-quality material in the market. You have to ensure that material entering the country is meeting the right standard,” he said, adding that upstream producers such as SABIC have the responsibility of improving downstream, steel-consuming sectors by working together to develop products.

Sabic’s metals segment lost SAR 1.5 billion in 2015, which led to a 20 percent year-on-year drop in net profit for the year, according to data available on Argaam.