Saudi Arabia's resilient construction industry drives demand for steel

JEDDAH (Scrap Monster): Saudi Arabia is emerging as a major consumer of steel thanks to a thriving construction sector, considered to be the largest and fastest growing market in the Gulf Co-operation Council (GCC) region.

The Kingdom relies heavily on steel imports but as the appetite for steel is growing in the Kingdom, its production will also grow at a compound annual growth rate (CAGR) of around 9% during 2012-15, according to a new report titled Saudi Arabia Steel Industry Forecast to 2013 released by Research and Markets.

According to the report,  Saudi Arabia Steel Industry Forecast to 2013, the steel consumption in Saudi Arabia has grown rapidly in the past few years on back of rising construction activities, growing investment in Railways, and cheap and reliable energy supply. In the next five years, the Kingdom is expected to sustain its leadership in construction activities in the entire Middle East.  Steel consumption in Kingdom reached around 12.1 million metric tons in 2011. Due to such a strong demand and soaring domestic steel prices, the share of imported steel is expected to witness an upward trend in the coming years.

This report discusses how the Kingdom showed its resilience to the downturn in the construction industry, which affected all Gulf Cooperation Council (GCC) countries. With multi-billion dollar projects underway in both public and private sectors, the country has gained a significant share in the total GCC construction spending.

Saudi Arabia has initiated large scale developments in its infrastructure projects to enhance business opportunities and reduce public debt. Projects market was worth US$ 647 Billion in the Kingdom in 2011. The country has pledged to spend about Billion dollars on housing projects and other social procedures. It has, in fact, reached on top among the Gulf countries in terms of value of planned infrastructure projects and projects being executed.