After suffering a severe slump in the aftermath of the economic crisis, steel prices recovered during 2010. The combination of producers scaling back production and a gradual pick-up in demand for metals provided a floor for the market. In the second half of the year, the market reversed, with prices climbing sharply, triggered by higher costs for raw materials.

Iron ore, coking coal and scrap metal prices are expected to continue climbing this year. With metals consumption also set to rise in line with a global economic recovery, analysts are predicting the cost of steel will climb 30-60 per cent this year.

This could impact on the Middle East in two ways. The region’s steel producers, with their low-cost production, stand to benefit from higher sales prices, although they will have to absorb rising iron ore prices. But the construction sector, the main consumer of steel, may have to pay extra for its materials. Contractors have endured a difficult couple of years, with revenues hit by the economic crisis. Rising costs could hamper their recovery.

But the geopolitical uncertainty caused by the Arab uprising could limit the growth of steel prices in the region. Turkish imports are already under pressure, says industry observers.

A slowdown in the Middle East’s economy could provide a counterbalance to the push for higher steel prices. Whether this will happen only regionally or will impact the global industry depends on how long the uprisings go on for.