Last year was a torrid time for the Middle East steel industry, as the slowdown in Chinese economic growth had an acute impact on local producers.

Overcapacity in China – which produces about half of the world’s crude steel – led to a surge in cheap imports into Middle East markets, putting downwards pressure on prices.

In early 2015, this led to regional producers, such as the UAE’s Emirates Steel and Al-Ghurair Iron & Steel, to call for the government to protect them from steel dumping.

Voices calling for trade protectionism in the steel market have grown louder not only in the Middle East but in Europe and other regions, as excess Chinese products flood the market.

But in the long term, the introduction of anti-dumping policies could work against governments in the region, for which steel production is a major cornerstone to diversify economies away from oil and gas production.

Protecting higher prices in steel will force companies in the UAE and other countries to pay higher prices for materials in construction projects and, at the same time, damage the competitiveness of downstream steel manufacturing.

Diversification of manufacturing into downstream industries is seen by GCC governments as a key development to create jobs in the future. But large steel consumers will not set up in the region if they are forced to pay above the market price for raw materials.

Even so, the region’s steel industry is going through a worrying period and prospects for major new steel projects on the horizon remain a concern.

Stay informed with the latest in the Middle East
Download the MEED app today, available on Apple and Android devices