Saudi Steel achieves record production

26/03/2010 00:00 AST

Saudi Steel Profile Co., a leading steel manufacturer in Saudi Arabia, has achieved record production capacity utilization by manufacturing 143,815 tons of hot rolled sheets and pipes/tubes at its SSP1 plant in Jeddah in 2009, an increase of 121 percent, against 65,142 tons in 2006.

The company has also repaid SR90 million debt to Saudi Hollandi Bank. Mohamed H. Zakaria, CEO and general manager of Saudi Steel, said he hoped the company would be debt-free by the end of the year, adding that the company, a wholly owned subsidiary of Ahmed Salem Bugshan Group, is working to increase its combined plant capacity to one million tons per annum by 2013 from current 600,000 tons per annum. The company has three plants in Jeddah and two in Yemen. Its long-term goal is to be an SR1-billion company by 2015.

According to Zakaria, Saudi Steel is already the largest in its segment of flat steel products such as angle bars, corrugated sheets, deco pipes, ERW pipes and tubes, expanded metal, flanges, flat bars, perforated sheets, studs and runners, steel sheets and steel plates.

SteelOrbis, an international body of steel manufacturers, has reported that Saudi Arabia's welded-pipe market continued its upward movement in February. SteelOrbis gives the credit to increased prices for flat products and improving market demand.

Zakaria is upbeat about the steel industry's prospects in Saudi Arabia. He said besides the ongoing construction boom, the massive expansion of railway network throughout the Kingdom was a good omen for the industry.

"Steel consumption is going to increase tremendously," he said.

With steel accounting for about 10 percent of construction cost, steel industry is set to earn revenues of $44 billion from projects worth $440 billion in progress in the next five to seven year's time, he claimed.

Zakaria forecast that the steel industry in the Kingdom was due for massive consolidation with two or three major steel players dominating the market.

"The Saudi market is one of the largest in the Middle East. Though Saudi Arabia contributes only 0.5 percent to global steel output, its consumption of 500 kg per capita is much higher when compared to India's 50 kg and China's 200 kg," he said.

Total installed capacity in Saudi Arabia for SSP segmented steel products is three million tons per annum. Saudi Steel claims to have 20 percent of market share. Main supplier of flat steel which is raw material for the company is SABIC's (Saudi Basic Industries Corp.'s) Hadeed unit. Saudi Steel also imports certain types of steel from the United States, Europe, Thailand, South Africa, South Korea, Japan and Vietnam.

Nearly 80 percent of Saudi Steel products are consumed within the Kingdom. The rest is exported to neighboring countries like Bahrain, Iraq, Kuwait, Qatar, Yemen and the United Arab Emirates.

Zakaria feels that Saudi Arabia has an industry-friendly environment where the government provides facilities such as the cheapest power tariffs in the world, land at a nominal cost and financing at a very low cost.

Arab News