Saudi Arabia’s recently-commenced exports of rebar should see inflows of this product into neighbouring Gulf Cooperation Council countries, leading to regional pricing pressure, according to Al Jazeera Steel. Cost pressure is seen continuing in 2018, with electricity and gas not subsidised in the GCC as they once were.

The Omani re-roller says steel exports from China should decline further in 2018 thanks to its policy of zero steel capacity growth, although this will be balanced by slowing Chinese economic growth

The recovery in oil prices and introduction of VAT in Saudi Arabia and United Arab Emirates is seen providing additional revenue that GCC governments can spend on infrastructure projects. Nevertheless, the region will have to adjust to the “…new normal” as households will have to get used to VAT. Only necessary projects are likely to get the green light.

Al Jazeera’s consolidated steel sales rose 19% on-year in 2017 to an annual record 400,895 tonnes. This was driven by a 26% rise in black pipe shipments to 79,460t and a 25% increase in merchant bar deliveries to 210,907t. Galvanized pipe sales grew 8% to 80,483t and hollow sections shipments rose 1% to 30,045t.

Jazeera achieved higher pipe sales despite “…slackness in the market by diversifying our markets and making more intense sales pitches,” the firm says in a report seen by Kallanish. Its Tube Mill division has a 300,000 tonnes/year capacity, of which 90,000 t/y is galvanized pipe.

The 300,000 t/y capacity Merchant Bar Mill division grew sales thanks to working a two-shift operation. Capacity utilisation stands at 65% compared to 55% a year ago.

Jazeera’s consolidated sales increased 43% in 2017 to OMR 96.68 million ($251.44m) thanks to the growth in shipments and higher steel prices. Revenue generated in GCC rose 39% to OMR 82.12m and sales in North America surged 66% to OMR 13.34m.

Net profit increased by only 6% to PKR 4.86m due to “…very high levels of competition” in the domestic market, depressed demand and geopolitical issues, Jazeera says.

Chinese steel exports declined in 2017 and especially so in the fourth quarter due to China’s restrictions on polluting mills. “While all this helped in terms of price appreciation and lack of dumping of finished products, the sourcing options reduced and hence ability of re‐rollers to source raw material at competitive prices also declined considerably,” Jazeera says.

Chinese exports to the Middle East and North Africa declined around -40% last year, due partly also to the reduction in regional steel consumption owing to geopolitical and economic factors.

Jazeera plans to open a warehouse in Dubai in mid-2018, “…further increasing the access of the company to one of the region’s most vibrant markets,” it says.