The First Saudi International Iron and Steel Conference

Keynote executive panel: Saudi’s Potentially Pivotal Role in Global Steel

Once a major steel importer, considerable investment into steelmaking and processing capacity has seen Saudi Arabia become more self-sufficient. The opening up of exports has resulted in the kingdom competing in the regional and global billet and long products markets, in addition to its already-established flat product exports. There is much potential in Saudi Arabia for further investment into value-added steel production to support the kingdom’s drive for economic diversification and cement its place as the regional steelmaking hub. This will require investment into innovative new technology as well as further exploration of the kingdom’s resources that could be used to support industrial expansion. International steel producers have the opportunity to lend their expertise and invest in the Saudi steel industry. This session will look at the prospects for Saudi Arabia’s steel industry development: investment opportunities in the kingdom, its future relationship with global markets, and Saudi Arabia’s potentially-pivotal role in the global iron and steel industry.

Moderator:

Talat Hafiz, Secretary General, Media & Banking Awareness Committee Saudi Banks

Panelist:

H.E. Bandar bin Ibrahim Alkhorayef, Minister of Industry and Mineral Resources
Andrea Diasparro, Danieli, Vice President
Paolo Rocca, Tenaris, Chairman and CEO
Sanjay Jayram, JSW, Executive Vice President
H. E. Dr. Abdualziz Saleh Aljarbou, SABIC, Chairman

Session 1: Saudi Vision 2030 Spurs Economic Growth and Investment

Saudi Arabian economic growth and, with it, steel demand, are poised to recover following a challenging few years due to lower oil prices. The kingdom is implementing its Saudi Vision 2030 programme that aims to reboot construction activity and encourage new end-uses for steel. As part of its economic diversification drive, Saudi is supporting the development of local content, which will provide a push for new manufacturing capacities in the kingdom. Buoyed by the recovery in oil prices, the Saudi government’s 2019 budget forecasts increased spending versus 2018, with capital spending set to rise 20% to SAR 246 billion. This is likely to give a boost to steel demand. However, with protectionism becoming the new buzzword worldwide following the imposition of US Section 232 tariffs last year, the economic recovery remains fragile and must be properly managed. Also requiring management is the pressure building on Saudi Arabia’s natural resources following decades of rapid economic growth. For this reason, the kingdom has developed several strategies, such as the National Environmental Strategy, to promote sustainable development. This session will examine the prospects for Saudi economic growth, the opportunities ahead and how they will be exploited, and also the potential challenges to growth and how they can be overcome.

Session 2: Middle East and North Africa Steel Outlook

Steel demand in the Middle East is expected to continue contracting this year with fiscal consolidation still hampering construction activity, although North Africa should perform better thanks to strong investment. Large government-backed projects in Saudi Arabia and United Arab Emirates, however, are seen boosting Arabian Peninsula steel consumption from 2020 onwards. The Gulf Cooperation Council, once a major steel importer, has increased self-sufficiency in various product categories and raised exports, especially to the fast-growing Asian markets. Economic diversification programmes have been stepped up and are expected to provide new sources of steel consumption in the next decade. In Egypt, meanwhile, improving natural gas availability is spurring increased domestic direct reduced iron and crude steel production to support economic growth aided by the country’s structural reforms. In Iraq, the stabilising socio-political situation should allow for the resumption of steel-consuming reconstruction projects that will be watched by regional suppliers. This session will examine the latest developments in the MENA steel industry, including how global factors are impacting the region, and offer an outlook on the challenges and opportunities that lie ahead.

Session 3: Saudi Steel Sector Development Strategy

The National Industrial Clusters Development Program (IC), in coordination with key Saudi private and government sector stakeholders, is developing a road map to ensure the sustainability of the Saudi steel sector and foster its growth, in line with the industrialization objectives of Saudi Arabia Vision 2030. This session will highlight the key aspects of the Saudi steel development strategy, including enabling measures and growth opportunities in high value-added steel products. The session will also discuss local content initiatives that aim to support the development of local industries and encourage economic diversification.

Session 4: Mining, Raw Materials and Supply Chain

Saudi Arabia has long been touted as an excellent location for low-cost direct reduced iron-electric arc furnace-route steelmaking thanks to its plentiful gas reserves and low energy prices. The discovery of iron ore deposits in the west of the kingdom has also raised the prospect of Saudi steelmakers becoming self-sufficient in raw materials. However, increased gas costs and supply shortages have led to DRI production issues in recent years, while tight iron ore pellet availability globally, coupled with a graphite electrodes shortage, has increased raw materials sourcing costs. Will Saudi make increased natural gas available for the steel industry? Is there technology available to mitigate the increased gas and electricity cost? What is being done to improve infrastructure in the kingdom in order to support logistics? This session will discuss all of these topics and more.

Session 5: Saudi Arabian New Economical Cities – Industry & Projects

The Saudi construction industry is the kingdom’s largest steel consumer. However, its output has fallen considerably since 2015 when state spending was curtailed due to lower oil prices. This, coupled with new steel capacity coming on line, resulted in a sizeable steel supply surplus in Saudi Arabia, especially for rebar. The outlook for construction has nevertheless improved with an array of huge projects set to break ground as part of Saudi Vision 2030. The most significant of these are Saudi Arabia’s economic cities. These will be smart cities that incorporate highly-advanced technology in transport infrastructure, automated government services, internet infrastructure and online education, and construction. There will also be focus on renewable energy, as the kingdom plans to invest in the latest solar power technology to conserve the environment and diversify away from fossil fuels. This session will look at the latest developments in the Saudi construction sector and how they bode for future steel demand.

Session 6: New End-Use Sectors for Saudi Steel

Another key facet of Saudi Vision 2030 is the plan to accelerate the kingdom’s long-touted diversification away from oil dependence. This should see the establishment of sectors such as automotive production, shipbuilding and military equipment manufacturing, all of which will provide new opportunities for steel consumption. Along with Saudi’s aim to increase local content, the development of these new industries will require investment into new steelmaking capacity for products not currently available in the kingdom. This session will examine the prospects for new Saudi steel end-use sectors.

Session 7: Global Steel Outlook

Following a strong steel industry recovery after a disastrous 2015, the latest slowdown in global economic growth has seen fears of steel overcapacity resurface. China has reduced exports but, given its considerable production growth so far in 2019, there is concern over what will happen if government stimulus subsides and consumption falls. Growing protectionism has made some regions more vulnerable to surplus exports than others. The focus is gradually shifting to India as the next growth driver. Government spending on infrastructure is driving steel demand growth, but is the country’s ambitious 300 million tonnes/year capacity target justified? In the US, economic growth, although slowing in the second quarter of 2019, has been robust despite President Trump’s promise of a massive infrastructure-spending programme yet to materialise. In the EU, declining automotive production has contributed to steelmakers cutting production. In Turkey, economic growth has slowed dramatically since mid-2018, impacting the global scrap market. Will Chinese steel demand remain balanced with production? Will India fulfil its potential? Will global trading patterns recover from protectionism? This session will aim to answer all these questions and more by looking at the prospects for global steel demand growth, with particular focus on key steel producing and consuming countries.