Raising the bar
Few expected the steel industry to succumb to the price, demand and even political obstacles it has over the last 12 months. Despite the challenges, this month’s steel buffs
What are the main applications for your products?
Hassan Samir: Attar Steel is focused on the business-to-business sector. We supply the construction and hardware industries, and general sheets and coils for various projects.
Mandeep Bhandari: Steel Masters International supplies the construction industry.
Our products are primarily used for roofing, cladding, fencing and air-conditioning (AC) ducting. Our prime customers include Zamil, Kirby and Mabani.
Nader Elhajj: Our main supply market is construction and our products are used mainly in labour residences, portable cabins and villas. Framecad doesn’t supply to the automotive or industrial sectors at the moment.
Globally we operate in 80 countries and in the Middle East, primarily in Abu Dhabi and Qatar. There are also high concentration markets in Afghanistan, India, Sub-Saharan Africa and South America.
Maged Mostafa: Genesis Manazil Steel Framing’s light-steel frame products are suitable for residential buildings up to eight storeys high, including schools, offices, small hotels and commercial plazas.
Muhammad Eissa: Our main applications are for industry, manufacturing and fabrication. Zamil Steel produces pre-engineered buildings, pre-fabricated housing and offers complete building systems.
We supply structural steel products and process equipment, power transmission and telecommunications towers, building components and open-web steel joists and decking.
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THE PANEL
Hassan Samir
General manager, Attar Steel
Mandeep Bhandari
Managing director, Steel Masters International Ltd
Nader Elhajj
Director Middle East andAfrica, Framecad
Maged Mostafa
Chief executive officer, Genesis Manazil Steel Framing
Muhammad Eissa
General manager — steel devision, Zamil Group Holding
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Where is the highest demand?
HS: The highest demand is in Saudi Arabia. The market requires galvanised sheets, stainless steel, perforated sheets and also decorative tubes and cable tubes.
MB: Our steel is being sold mostly to the UAE and Saudi Arabia; geographically we reach as far as Egypt, with 40 to 50% of our business coming from KSA and Egypt.
MM: In addition to our presence in the UAE, we export to and have light-steel construction activities in Iran, Pakistan, Afghanistan and KSA. We’re looking into modular solutions for applications such as temporary high-end offices and labour residences. On top of this, we’re negotiating with prospective partners to expand into Syria, Egypt and Morocco.
How have demands for steel changed recently?
HS: Demand is increasing, slowly. There are many factors and these depend on the region. In the Middle East everything is affected by politics, especially in Lebanon where we are based. We also have branches in Saudi Arabia, but it is politically stable there so we see that continuing to be a strong market in the future.
MB: The UAE was our primary market but has tapered off and now we are concentrating on Saudi Arabia and North Africa; mostly Egypt and Sudan. We are also looking beyond the Middle East and North Africa region; going towards Iraq, Syria, Lebanon and Jordan. Iraq has strong potential, but there are problems with payments.
When the market slowed, we supplied to new types of developments such as office buildings, hospitals, schools and so forth”
NE: Demand over the last few years has changed drastically, with some products increasing 50% year-on-year. This has been driven by the speed of construction; what normally takes a year and a half you can now do within months. When the market slowed, we supplied new types of developments, such as office buildings, hospitals, schools and so forth.
ME: The Middle East is considered our core market as we continue to cover all parts of the region. During the 1990s, we expanded further afield to establish production facilities in Vietnam, Egypt, the UAE and India. The highest demand for our products lies in all fields of industry in the GCC, particularly Saudi Arabia.
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5% – 6%
The average steel demand increase year-on-year in the Arab countries
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What are the most significant factors that are affecting your current operations?
HS: In Lebanon the market fluctuates and this is, again, linked to politics, where as operations in Saudi Arabia are strong and there are government strategies for expansions such as King Abdullah Economic City and universities in Jeddah and Riyadh.
MB: Since the financial crunch customers are becoming choosy because of immense competition. As a result, our market share has fallen and we have worked very hard to give competitive rates. Customers still want good service which we are providing by reducing lead times.
NE: Advancements in technology have made life much easier, for example automated systems. Our machines today are three times faster than our machines three years ago.
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3.8%
China is the biggest steel producer in the world, but saw a decline in production of 3.8% between October 2009 and 2010
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This is not an industry-wide standard, but of course it typically translates into faster production times.
MM: We’re not prone to many market variables unlike traditional construction operations, as we follow the ‘lean’ manufacturing model. The only major factor that would affect our operation is steel price variations as a worldwide commodity.
How have fluctuations in prices and demand affected the business recently?
HS: When the price increases, the market holds down and vice versa. To counter this we participate in exhibitions, expand into new lines and increase our diversification in the business with new ideas. Last year we exported to Italy and the Far East for the first time.
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$2.8b
The value of the 45 working steel factories in the Middle East region
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MB: The effect can’t be quantified yet, but business has been very much affected, especially in terms of prices and competition.
NE: The effects in the region are minimal because of the dependence on steel; the market has no option.
If concrete is used, steel rebar is needed, so the impact is minimised.
The year 2010 has not been an easy one, but the market shake-up has cleared the path for more serious developers, suppliers and contractors”
MM: Fluctuations affect all businesses; however, we try to mitigate that by diversifying our target vertical sectors including residential, commercial and institutional buildings alike, with regards to prices of commodities that we use as input to our production, including steel. As steel prices go up, it is a good indication that markets are recovering.
This means that, today, we have a better chance of winning more projects and enhancing our economies of scale.
Currently, where are the major opportunities for 2011 in the market and wider industry?
HS: The major opportunities are in Saudi Arabia, following up demand for new projects. I hope there will also be more opportunities coming up in the UAE.
MB: There is oversupply, which is clearly creating problems and customers are now more price conscious than quality conscious. But there is strong growth in places like Saudi Arabia and we are concentrating more on the industrial sector, which is on the rise.
NE: The opportunities in this region are huge; our operations only just scratch the surface. In the future we are looking at putting satellite offices in Saudi Arabia and Qatar, these are growth areas for us.
There are always obstacles when doing this, such as people’s perceptions and gaining business approvals, but these exist in every market around the world.
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67
The number of steel plants in the Arab region
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MM: The year 2010 has not been an easy one, but the market shake-up has cleared the path for more serious developers, suppliers and contractors. Thanks to the wealth of natural resources and solid population growth, the region is in a relatively better position than many other areas around the world. Demand is relatively stronger than other traditional markets particularly for our light-steel and off-site construction system.
ME: Our major operations are within construction, oil and gas and we are adopting a dynamic approach of moving swiftly in and out of markets, depending on the risk or opportunities certain regions possess.
We are always looking to expand our presence beyond the Middle East by supplying high-quality steel products and related services to an international client base.
CONSTRUCTION TRIVIA
•According to the World Steel Association (WSA), Turkey and Iran were the largest steel producers in the Middle East in 2010
•Steel products can be recycled repeatedly without loss of strength
•Recycling steel saves the equivalent energy to power about 18 million households for a year
•The amount of energy needed to produce a ton of steel has been reduced by 34% since 1972
•Global steel consumption is estimated to have fallen by around 9% in 2009
•Steel was first used in skyscrapers in 1883 and in cars in 1918
Steel has the highest strength-to-weight ratio, making it the strongest building material available globally
