Manufacturers such as Italy’s Danieli may edge out local firms for projects because of their updated technology
The Middle East has long been viewed by steel companies as a huge potential growth area, but it still remains an elusive market for many.
Most of the region’s largest steel producers are state-backed. Therefore, any attempt at major production by independent international companies is difficult.
This does not apply to the actual steel plant manufacturers, with Italy’s Danieli, Germany’s SMS Group and Austria’s Siemens Steel all having significant interests in the region.
What is encouraging about this is that all of the investors in the Middle East steel industry recognise that investing in high-quality machinery always pays for itself in the long run.
Danieli has edged ahead recently with a couple of decent-sized awards in Oman and Iraq, but Siemens have a Qatar Steel contract and SMS is executing the Hidd Steel Mill project in Bahrain, as well as the South Steel plant in Saudi Arabia.
Over the next 12 months, competition is going to become even fiercer as phase three of the $1bn Emirates Steel Industries (ESI) finally goes to tender, along with the $3bn Al-Rajhi Steel complex in Saudi Arabia.
Danieli has got to start as favourites for the ESI phase III after completing phases I and II, but both SMS and Siemens are planning to form consortiums that will also be able to offer attractive terms.
The three companies are at the top of the list because they invest tens of millions of euros on research and development programmes that ensure they take the technology to new levels on an almost yearly basis.
The local steel producers know this, which is why all three companies continue to set the standard and win the work.