WE GIVE THE STEEL TRADE A LIFT.

Salzgitter Mannesmann International is always performing at its best

to ensure that we give your daily steel business a lift.
Visit us at www.salzgitter-mannesmann-international.com for information.
121130_Metal_Bulletin_Supplement_Middle_East_Steel.indd 1 30.11.2012 14:00:35
Middle East Steel 2012
www.metalbulletin.com
supplements
Middle East Steel 2012
supplements
Ask international plantmakers which regional markets have kept them busiest over
the past few years and alongside the BRIC countries many of them will point to
the Middle East. Ask them now where the most promising new markets are and a
number will also mention Africa.
While some projects to increase steelmaking capacity in the Middle East and
North Africa have proceeded more slowly than originally envisaged large and
temporarily immobile inventories of billet and rebar plunging in value in the
wake of the fnancial crisis several years ago forced reconsideration of their pace of
progress signifcant advances have been made. Projects at Emirates Steel in UAE,
Sulb in Bahrain and Jindal Shadeed in Oman are examples of regional expansion.
The fundamental advantages of producing steel in the region are unchanged. An
abundance of reasonably priced power for such an energy-intensive industry is
one of them. A plentiful supply of natural gas as a reducing agent for making direct
reduced iron (DRI) is another.
Given the well-known statistic that about half of all steel production globally
is used in construction, the potential for Mena consumption to grow is also
particularly attractive for steel investment in the region. The internationally
recognised high-rise towers of Dubai have become emblematic of world class
construction, but there are plenty of other commercial, residential and industrial
buildings as well as infrastructure projects needing steel, for which the regions
own mills are adding capacity. Specialised steel products like heavy sections or
seamless tubes are amongst them. Plans for new fat product mills are under way.
Investment in steelmaking capacity upstream is reducing regional demand for
imported billet.
The oil & gas industry, whose revenues drive much of the capital investment in the
Gulf region, is a signifcant steel consumer itself of course.
Infrastructure development offers a particularly promising steel market. The Gulf
Co-operation Council countries of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and
UAE, for example, have plans for or are actively engaged in airport expansion
and/or reconstruction. They also have plans for rapid-transit, light-gauge railways,
several of which are already under way. In addition, a $106 billion, 2,200 km inter-
state Gulf Rail project is scheduled for 2017. Kuwait alone plans 60 stations.
This Metal Bulletin Focus supplement provides: a review of market developments
this year, with comment on the immediate outlook in 2013; a summary of the
detailed long-term analysis of the regions steel industry recently made by Metal
Bulletin Research; a country-by-country look at steelmaking projects recently
completed, under construction or planned; and a review of the latest DRI capacity of
the Mena region as producer of more than a third of global DRI output and home to
the latest technologies for hot charging to an EAF.
No-one really needs to be reminded of the Mena areas recent problems among
them confict in Syria, an uneasy ceasefre between Israel and The Gaza Strip,
internal tensions in Libya and Egypt as new governments evolve after the Arab
Spring, and the effects of sanctions in Iran as the West continues to keep a watchful
eye on development of the countrys nuclear capabilities but no comment on the
region would be complete without mentioning them either. Clearance work, scrap
handling and rebuilding are essential steps for communities looking to rebuild lives
shattered by confict.
Taken as a diverse whole, the Mena region encompasses higher than average risks
and rewards. It is for each investor in the region whether internal or external to
weigh up the opportunities against the threats.
Risks and rewards
Published by the Metals, Minerals and Mining division of Metal
Bulletin Ltd.
Metal Bulletin Ltd, Nestor House, Playhouse Yard, London EC4V
5EX. UK registration number: 00142215.
Editorial headquarters: 5-7 Ireland Yard, London EC4V 5EX.
Tel: +44 20 7827 9977.
Fax: +44 20 7928 6892 and +44 20 7827 6495.
E-mail: Editorial@metalbulletin.com
Website: http://www.metalbulletin.com
Metal Bulletin Focus:
Editor, Richard Barrett; Associate Editor, Steve Karpel.
Tel: +44 (0)20 7827 9977
Magazine design: Paul Rackstraw
Publisher: Spencer Wicks
Managing Director: Raju Daswani
Customer Services Department:
Tel +44 (0)20 7779 7390
Advertising: Tel: +44 20 7827 5220
Fax: +44 20 7827 5206.
E-mail: advertising@metalbulletin.com.
Advertising Sales Director: Mary Connors
Sales Team: Julius Pike, Abdul Zaidi, Susan Zou
USA Editorial & Sales: Metal Bulletin, 225 Park Avenue South,
8th Floor, New York, NY 10003.
Tel: +1 (212) 213 6202.
Toll free number: 1-800-METAL-25.
Editorial Fax: +1 (212) 213 6617.
Sales Fax: +1 (212) 213 6273.
Subscription Enquiries
Sales Tel: +44 (0)20 7779 7999
Sales Fax: +44 (0)20 7246 5200
Sales E-mail: enquiries@metalbulletin.com
Metal Bulletin Ltd is part of Euromoney Institutional
Investor PLC: Nestor House, Playhouse Yard, London EC4V 5EX
Printed by The Magazine Printing Company plc, Enfield EN3 7NT, UK
Metal Bulletin Limited, 2012
CONTENTS
The long view
Metal Bulletin Research analyses
long-term trends in steel production
and consumption in the Middle East
and North Africa 4
Markets stabilise,
competition grows
Steel demand in the Middle East has
stabilised this year, but competition
between domestic steelmakers and
importers to satisfy it is fierce 9
Integration, expansion
and diversifcation abound
Steel companies across the region are
increasing capacities and widening product
ranges in response to local markets and
anticipated demand 14
Direct reduction is the
primary choice
Direct reduced iron is widely produced and
used as a feedstock for steelmaking in the
region, and capacity continues to climb 21
December 2012 | Middle East Steel | 3
4 | Middle East Steel | December 2012
Middle East Steel 2012
Overview
Metal Bulletin Research has been providing
a very detailed study of regional markets in
the Middle East and North Africa for the last
twelve years and in its latest report*
examines supply, demand and
consumption of steel products and also
gives a forecast for the next fve years.
In MBRs view, the most stunning progress
will be made in steelmaking itself. It
expects crude steel output to double in the
Middle East to 50 million tonnes by 2018 and
to almost 18 million tonnes in North Africa
(see graphs).
The capacity expansion needed for this
growth in production is from both
greenfeld and brownfeld sites. Moreover,
mills that have started up in 2012, such as at
Maghreb Steel in Morocco, ESI in UAE, as well
as a re-start of Lisco in Libya, will contribute
to higher production levels in the short
term. In addition, MBR expects higher
output in Iran as well as the development of
a small steelmaking industry in Iraq by the
end of the forecast period.
Most of the investment will be in long
products and this refects the consumption
pattern in the region, of which 75% is long
products. Nevertheless, one key trend is the
backward integration into crude steel that
to some extent will displace the regions key
defcit, which is currently served by
imported billet.
Sulb in Bahrain, for example, is building a
1 million tpy EAF plant that will supply its
own new 600,000 tpy section mill as well as
supply 400,000 tpy of billet to its acquired
The long view
Despite the immediate conficts and political
unrest in parts of the Middle East and North Africa,
there is a different story to tell about the regions
steel industry, which is burgeoning. Metal Bulletin
Research analyses the long-term outlook
Metal Bulletin Research expects crude steel output
in the Middle East to reach 50 million tpy by 2018
D
A
N
I
E
L
I
December 2012 | Middle East Steel | 5
sections plant in Saudi Arabia the former
United Gulf Steel. It will then leverage its 1.6
million tpy of DRI capacity to add another 1
million tpy EAF and will make up to 500,000
tpy of rebar by 2014/15.
Jindal is building a 2 million tpy EAF for
completion in 2013 that will be fed from its
existing DRI plant in Oman. It then has plans
to move further downstream with an initial
investment in a medium section mill,
although this has yet to be confrmed.
In Qatar, Qasco is replacing its current EAF
with one of an expanded capacity that will
allow it to fully supply its own billet
requirements in UAE and Qatar.
Meanwhile a number of smaller producers
are planning to produce billet for sale. Sulb
of Saudi Arabia, for example, is planning a
300,000 tpy induction facility due on stream
in 2014.
This of course has implications for current
billet providers primarily in the CIS. One
strategy has been to co-invest in re-rollers in
the region, such as Metalloinvest with
Hamriyah. However, the narrow spread
between billet and rebar in the UAE means
that this has only operated intermittently.
Other pure re-rollers such as RAK Steel have
now exited the market. Its equipment was
re-located to Oman, where it will roll rebar at
Sharq Sohar and be integrated with that
companys new 300,000 tpy EAF. Another
re-roller, Star Steel, has found it tough to
compete in the rebar market, but has had
some success re-rolling light and medium
sections for the local market.
Finally, Iranian billet imports halved in 2012
due to problems in securing foreign currency,
but it also refects backward investment by
private sector re-rollers into steel capacity.
Only in Saudi Arabia, where controlled
prices for rebar have allowed a proftable
spread between billet and rebar, have
re-rollers been successful. Other markets
such as Morocco have also been good for
re-rollers where the differential in import
tariffs between billet and fnished steel has
allowed them to fourish. However a tariff
reduction (for EU suppliers at least) in
Morocco means that re-rollers here will
struggle in the future.
Raw material demand
The presence of cheap natural gas has made
DRI the natural choice for large integrated
plants. Indeed, MBR views the cost structure
of these regional DRI-EAF mills as a key
advantage compared with coal-dependent
blast furnaces. However, natural gas within
the region remains primarily the property of
the state via the national oil companies or
their distribution arms.
The option of supplying gas to the private
sector to generate DRI and steel (and proft)
has to be compared with other opportunities
such as power generation or LNG. As such,
there have been few examples of the state
being willing to supply long-term gas
contracts at low prices to non-state groups.
Moreover, even when it has (as in Egypt),
political changes and licensing arrangements
have sometimes made the process opaque.
MBR therefore treats claims of DRI expansion
by private groups that have yet to secure gas
allocations with some scepticism in its
forecasts.
However, expansions by state-affliated
companies such as Sabic, ESI, Qasco and Sulb
will still generate signifcant additional
demand for iron ore pellet, while MBR
expects the expansions in Egypt to come
on-stream over 2013 or shortly after.
The expansions by Gulf Industrial Investment
Company (GIIC) in Bahrain and the start-up of
Vale in Oman mean that there is now 20
million tpy of pellet capacity in the region
enough to satisfy much of the merchant
demand in the region. As a whole, the region
was a major net importer until recently,
although the last few years have seen a
signifcant increase in exports of iron ore from
Iran to China. As iron ore prices fall, MBR
believes that those exports will also decline,
but the pellet requirement in the region will
show signifcant growth and this could justify
further investment in capacity with projects at
present under examination by both Vale and
GIIC.
Yet scrap will also see an increase in
demand. Smaller private sector mills without
EXAMPLES OF NEW (AND PROPOSED) CAPACITY IN MENA (000 TONNES)
Country Company Type Crude Rebar Rod Sections HRC CRC HDG Notes
Bahrain Sulb DRI-EAF 1,100 600 2012/13
Sulb EAF 1,000 500 2014
Oman Sharq Sohar EAF 500 2013 plus transfer of RAK
from UAE to Oman
Jindal DRI-EAF 2,000 2013/14
Qatar Qasco DRI-EAF 600 Brownfeld expansion
Al Watania EAF 400 200 100 100 2012
Saudi Hadeed DRI-EAF 1,000 500 2013
Arabia Al-Rajhi EAF 150 700 300 2012
Al-Rajhi DRI-EAF 3,000 400 1,600 600 400 2017/18
Al-Yamamah EAF 800 2014 - may be delayed
Atoun Steel EAF 900 500 2014/15
South Steel EAF 1,000 1,000 2012/13
Sulb EAF 300 2014
Al-Quryan EAF 300 2015
UAE ESI EAF 1,600 1,600 2017 - not yet approved
Algeria Tosyali EAF 1,000 1,000 2013
Qatar Steel DRI-EAF 5,000 5,000 Feasibility under way
2017/18
Egypt Beshay DRI-EAF 1,500 1,000 2012-13
Suez DRI-EAF 1,250 2012-13
Ezz DRI-EAF 1,300 1,000 250 2013-14
Elmarkaby EAF 350 2013-15
EAF - Electric Arc Furnace, DRI - Direct Reduced Iron Source: MBR
MIDDLE EASTERN
*
CRUDE
STEEL OUTPUT

0
60
10
20
M
i
l
l
i
o
n

t
o
n
n
e
s
30
40
50

2
0
0
6


2
0
0
7


2
0
0
8


2
0
0
9


2
0
1
0


2
0
1
1

2
0
1
2

(
e
)

2
0
1
3

(
f
)

2
0
1
4

(
f
)

2
0
1
5

(
f
)

2
0
1
6

(
f
)

2
0
1
7

(
f
)

2
0
1
8

(
f
)

NORTH AFRICAN
*
CRUDE
STEEL OUTPUT

0
20

2
0
0
6


2
0
0
7


2
0
0
8


2
0
0
9


2
0
1
0


2
0
1
1

2
0
1
2

(
e
)

2
0
1
3

(
f
)

2
0
1
4

(
f
)

2
0
1
5

(
f
)

2
0
1
6

(
f
)

2
0
1
7

(
f
)

2
0
1
8

(
f
)

2
4
6
8
10
12
14
16
18
M
i
l
l
i
o
n

t
o
n
n
e
s
*Algeria, Morocco, Tunisia, Libya, Egypt, Sudan
Source: MBR
*Bahrain, Iran, Iraq, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi
Arabia, Syria, UAE & Yemen Source: MBR

Middle East Steel 2012

Overview
December 2012 | Middle East Steel | 7
gas supply agreements, such as South Steel
in Saudi Arabia or United Steel in Kuwait,
have built scrap-based EAFs. Some of this
has been secured locally, although
increasingly imports will play a factor. Al
Yamamah, Atoun Steel and Sulb in Saudi
Arabia and Tosyali in Algeria are all building
scrap-fed EAFs.
Moreover, even DRI-EAFs will increase their
proportion of scrap utilised. Rather than
relying on 90-95% DRI and just utilising
internally-generated scrap, MBR believes
that these mills may drop their DRI rates to
75% or so and supplement with scrap. For
example, ESI is examining its fat product
expansion of 1.6 million tpy without adding
a new DRI module and it appears that Sulb of
Bahrain may do the same as it adds a 1
million tpy EAF in 2014.
Both trends will result in rising scrap
imports, but will be complemented by
improved scrap collection chains that will
result in increased domestic scrap collection.
Nevertheless, this will lead to more
competition to secure scrap imports and to
secure raw materials domestically. Over the
last few years, there has been an increase in
scrap export bans, with Algeria, Saudi Arabia
and Morocco implementing them. There will
be more to come, in MBRs opinion.
Merchant DRI/HBI therefore becomes an
option for steelmakers. Flat product mills in
Morocco and Turkey are buyers of merchant
DRI, as are regional long product EAFs such as
South Steel. However, MBR sees some
constriction in supply here and consequently
mills may need to secure material from
outside the region. Jindal will largely exit
this market in 2013, as it brings its steel mill
on line. MBR estimates that it will sell around
1.5-1.7 million tonnes in 2012, although MBR
also believes that it will continue to sell a
more limited amount.
Qasco is also likely to reduce its sales from
2013, as will ESI once it brings on its fat
product mill around 2017. While Sulb will be
selling some DRI from the second half of 2013,
it too is likely to exit sales after bringing on
its second EAF in 2014. As a result, external
suppliers such as Lebedinsky and Lisco will
see increased opportunities.
Demand growth
Of course investment in steelmaking capacity
in the region only makes sense if demand
growth is strong enough to justify local
sourcing and if it is cost-effective. In terms of
demand, that is certainly the case. Even in
2011 and 2012, when consumption in certain
markets fell dramatically due to civil
disturbance and political uncertainty
Egypt, Libya, Tunisia, Syria long product
consumption in the region rose by 4.5% and
an estimated 5.0%, respectively.
One of the strongest regions for growth has
been in the Gulf Co-operation Council (GCC)
market. High oil and gas prices have provided
a budgetary boost to governments. In turn,
they appear to have undertaken a political
commitment to invest in infrastructure and to
diversify into manufacturing in what remain
quite centrally-driven economies. This is
hugely steel-intensive and will underpin
medium-term steel demand growth for at
least the next 2-3 years, with Saudi Arabia the
key example. This is not only important for
rebar and structural sections, but also for
products such as wire rod. As an example, the
Omani governments private investment
group Takamul is building a 60,000 tpy
galvanized wire plant in 2013 in conjunction
with Singapores Global Steel Industries.
North African long product demand has
been hit in the last couple of years by political
uncertainty in Tunisia and Egypt and the civil
war in Libya. While it may be too early for a
defnitive call, it is MBRs view that long
product demand will return to these markets
by 2013/14 and could accelerate later in the
forecast period. A key imperative in these
economies is to provide housing for young
populations, while infrastructure investments
will be a relatively simple way to generate
employment growth. Both will be enormously
steel-intensive.
An example of the astonishing growth rates
possible is the performance of Iraq. Imports of
rebar are expected to touch 2 million tonnes
in 2012 for example to the huge beneft of
Turkish and Ukrainian suppliers. Structural
sections imports are also growing fast. While
again this is subject to political uncertainty,
MBR believes that strong growth rates will
remain in place for the near term.
Iran, however, is of some concern. At over 20
million tpy of fnished steel consumption at
its peak, MBR estimates that demand will fall
by more than 10% in 2012 and imports have
borne the brunt of this as tightening sanctions
have limited foreign exchange availability. We
expect that imports will fall again. Meanwhile
the development of the indigenous DRI
industry remains well behind schedule and
struggles to source equipment.
Despite this, MBR is forecasting an average
annual demand growth of 7.2% for regional
long product consumption out to 2018.
Consumption will surpass 80 million tonnes
compared to an estimated 58 million tonnes
in 2012.
Approximately 25% of fnished steel
demand is for fat products. The key
consumers are tubular manufacturers and the
construction product industry, which
between them account for over 80% of
regional demand. There are a number of
smaller markets including shipbuilding,
transformers, barrels and containers,
packaging, automotive as well as some light
industrial manufacturing, while Turkey and
Iran produce a wider range of manufactured
products.
Flat products will see demand growth, but
in MBRs opinion this will be slower than for
long products. MBR is forecasting average
annual demand growth of 5.8% out to 2018.
Iran will be a key drag on growth as it currently
consumes a third of the regional total.
There are growth opportunities
nevertheless. Tubular facilities such as Kuwait
Pipe Industries new LSAW mill are due
on-stream, while there are a number of spiral
linepipe projects in Iraq. Construction
products such as purlins, sandwich panels
and HVAC equipment are increasingly made
locally and are likely to show signifcant
growth.
Yet regional projects in the Middle East are
some way away with none confrmed. The
furthest progressed is the ESI 1.5 million tpy
hot rolled coil project that is scheduled for
2016-17. Al-Rajhi of Saudi Arabia has another
1.5 million tpy project, but this will not be
ready before 2018. Moreover, Turkish EAF mills
are operating below capacity thanks to
compressed spreads between scrap and
fnished products.
Import implications
The regional net defcit in long products has
slipped in the last couple of years to around
4-5 million tpy, although this includes the net
exporter Turkey shipping to Iraq and the GCC
region. With much of the investment going
into long products, MBR believes that this
defcit will be relatively stable looking
forward. Rising capacity will also mean that
the infows will shift more to North Africa and
Iraq and away from Iran and the GCC area.
On the other hand, the integration back into
crude steel production along with the poor
economics for re-rollers means that the net
defcit for billet will drop sharply. Over
2007-09, this net defcit was almost 10 million
tpy. By the end of the forecast period,
however, MBR expects that this will more than
halve. Iran is likely to exit the slab import
market completely as well.
In fat products, however, the lack of local
supply growth combined with rising demand
will result in a widening defcit. Already a
signifcant 10 million tpy, MBR expects it to rise
to almost 14-15 million tpy by 2018. European,
Asian and CIS mills will target this market.
*Metal Bulletin Researchs report The Five-Year
Strategic Outlook for the Middle East & North
African Steel Industry covers the following
countries: Algeria, Bahrain, Egypt, Iran, Iraq,
Israel, Kuwait, Lebanon, Libya, Morocco,
Oman, Qatar, Saudi Arabia, Sudan, Syria,
Turkey, Tunisia, United Arab Emirates, Yemen.
8 | Middle East Steel | December 2012
Coil-Tainer Limited
v|s|t os at oot webs|te ot cootact os J|tectly, we woolJ be pleaseJ to J|scoss w|tl yoo yoot oo|qoe sl|pp|oq oeeJs ftom ot|q|o to Jest|oat|oo.
www.coi|-tainer.com
zo Best loq|st|cs/1taospottat|oo ltov|Jet of tle Yeat
An lndeendenL NvOCC oceun currler dedlcuLed und focused excluslvely on Lhe shlmenL of sLeel, ulumlnum, Lln luLe und coer colls uLlllzlng
our revoluLlonury sysLem develoed us Lhe ulLlmuLe soluLlon Lo shllng lurge und heuvy colls sufely...rellubly...emclenLly...und dumuge free!
WlLh our specio//y designed potented Coll-1ulner ulleLs, we uccomllsh ull Lhls wlLh Lhe ublllLy Lo shl ln u sLundurd oceun-shllng conLulner.
The advantages of Coi|-Tainer are:
Loudlng und unloudlng of conLulners done much fusLer wlLh less
lubor, sufer und ln beLLer worklng condlLlons.
Less hundllng of colls und consequenLly no dumuges.
Mu|or reducLlon ln uckuglng muLerlul.
No wooden blocklng or bruclng requlred.
No wooden shllng skld requlred.
No fumlguLlon of wood requlred - no wood ln Lhe conLulner.
No seclul conLulners requlred, sLeel colls shled ln u
sLundurd lSO conLulner.
ReducLlon ln lnsurunce Clulms und Clulms Hundllng.
Coll-1ulner 8lll of Ludlng.
Weekly Fxed sulllngs.
1.l.1 dellvery.
Wurehouslng und dlsLrlbuLlon oered.
Oceun ruLe on u er Lon busls, Lherefore you only uy
for whuL you shl.
Coll-1ulner's exemlury dedlcuLed cusLomer servlce
und resonslveness.
Coi|-Tainer Limited
6 WesL ChesLer Plke, SulLe o
WesL ChesLer, PA g8z
Phone: -6o-g8-8ooo
lux: -6o-g8-868o
Lmull: lnfoQcoll-Lulner.com
European Omce:
Coll-1ulner LlmlLed
AnLwer, 8elglum
Phone: z..o.g,
lux: z..z.g
Lmull: LlrkvQcoll-Lulner.com
Middle East Steel 2012
Market outlook
December 2012 | Middle East Steel | 9
The Middle East steel industry has had a diffcult
time this year and there are no signs that there
will be an improvement in demand or
consumption levels in 2013 due to the bleak
outlook for the global economy.
The region has recovered reasonably well from
the political turmoil caused by the Arab Spring in
2011 and most markets are back to stability,
which supports healthy steel demand and
consumption levels.
The biggest sales markets for Turkish, Russian
and Ukrainian rebar exporters continue to be
the usual players in the Gulf Co-operation
Council (GCC), with Saudi Arabia and the United
Arab Emirates particularly important due to their
steady demand from the construction sector.
The Saudi government is investing its huge
revenues from oil and gas exports to invest in
steel-intensive projects. It has several multi-
billion dollar investment plans in the pipeline to
improve infrastructure and housing for its
growing young population.
There is always good demand from Saudi
Arabia, but compared to fve years ago when
there were about eight traders selling into Saudi,
maybe now there are about 150. So the rebar
market is very good in Saudi, but the profts [for
the traders] are not good, said one trader in the
GCC region.
Construction cools
Construction activity by private real estate
companies is continuing in the UAE, although it
has fallen immensely since the global fnancial
crisis in 2008 when the market was inundated
with developers keen to cash in on the building
boom in Dubai. Those days are gone.
Despite the overall slump in the building
market in the UAE since the fnancial crisis,
government orchestrated projects for housing
citizens in Abu Dhabi have become the biggest
consumers of rebar in the UAE. The majority of
Abu Dhabis rebar requirements are sourced
from its state-owned domestic mill Emirates
Steel.
Rebar demand and consumption levels have
plummeted signifcantly in the Middle East over
the last four years. Several major construction
projects not backed by governments were
cancelled or put on hold due to fnancial
constraints and have yet to materialise.
Traders and stockists in the GCC region still have
vivid memories of when their rebar inventories
plummeted in value from record highs of $1,450/
tonne in July 2008 to less than $450/tonne in
December that year.
Numerous international rebar trading,
distribution and re-rolling companies were
forced to write off large inventories worth many
millions of US dollars. Some smaller companies
went out of business or focused on other
products like sections.
The events in 2008 have changed the
psychology of the rebar market in the Middle
East from speculating about prices, generating
high stocks and intensive selling into the current
situation of purchasing small tonnages
sporadically, on a hand-to-mouth basis, to
avoid being caught out by an uncertain market.
Demand steadies
Long product demand from end-users has
remained scant throughout 2012 and buying
activity has been cautious. Some traders have
been struggling to stay in business and have
switched to trading other commodities since
their customers in the Middle East have reduced
their rebar purchasing volumes. They are buying
small tonnages of a few thousand tonnes to
serve their immediate needs instead of tens of
thousands of tonnes four years ago.
Rebar stockists have been keeping low-to-
medium inventories levels and they are more
interested in trying to liquidate their existing
stocks to generate cash fow, rather than
building stock levels, when demand is scant and
market outlook is uncertain. There is currently
an oversupply of rebar in the UAE according to
market participants in the region.
Distributors have plentiful stocks to serve the
needs of a local market characterised by the
sporadic purchasing of small volumes to
replenish stocks of certain rebar sizes and
grades. There has not been immediate demand
for imports from Turkey, China or CIS countries for
most of the fourth quarter.
China offers
The Middle East was fooded with cheap hot
rolled coil and rebar import offers from Chinese
mills in August, September and October. China
was desperate to reduce its stocks due to
signifcant over-supply and weak demand in its
domestic market which in turn led to cut-price
deals and quick delivery to Gulf clients.
Rebar from Turkey is still the frst choice for
buyers in the Gulf region due to its quality, but
the lower-priced offers from China attracted
purchases from consumers who were keen to
cash in on lower prices despite low demand.
During this period there was as much as
100,000 tonnes of ready-made inventory sitting
among the major Chinese mills that they were
struggling to sell.
Markets stabilise,
competition grows
Steel demand in the Middle East has stabilised at
a healthy level this year, but competition
between domestic steelmakers and semis and
steel importers to satisfy it is ferce. The outlook
for 2013 is for more of the same, reports Stacy Irish
By some estimates, Mena regional demand for heavy sections like these produced at Emirates
Steel in UAE - will reach 8.5 million tpy in 2020
D
A
N
I
E
L
I

10 | Middle East Steel | December 2012

The
mobile app is now live
Get your latest global metals news on the move
www.metalbulletin.com/mobile-app
Available for iPad
and iPhone
Free to download
from the App Store
Middle East Steel 2012
Market outlook
December 2012 | Middle East Steel | 11
At the end of September hot rolled coil import
transaction prices from China to the GCC region
plummeted by $50 per tonne to $550-560 per
tonne cfr main Gulf port , compared with the
previous price of $600-630 cfr.
Discouraging imports
GCC import prices for billet, rebar and hot rolled
coil have steadily declined since April this year
(see graph). Competition between Turkish and
CIS exporters and domestic producers, such as
Hadeed and the Al-Tuwairqi group in Saudi
Arabia, Qatar Steel and Emirates Steel, in Abu
Dhabi, is ferce.
Governments in the GCC region have
encouraged their citizens to purchase steel made
in the Middle East to prevent large volumes of
imported material, which puts pressure on its
domestic prices.
Hilal Al-Tuwairqi, chairman of Saudi Arabian
steel producer Al-Tuwairqi Holdings and former
president of the Arab Iron & Steel Union, is urging
governments in the GCC region to impose a 20%
import tax on rebar imports to put an end to
what he refers to as dumping practices.
Also, Saeed Al Romaithi, ceo from Emirates
Steel, is working closely with the Abu Dhabi
government to impose customs duties on steel
imports to the UAE. He wants an additional 5%
customs duty on rebar imports to support
domestic steel producers in the UAE.
The UAE government has an existing 5%
customs duty on imported rebar, which was
reinstated in February 2009. But it is not enough
to fend off the large import volumes from Turkey
and the CIS, which have been cashing in on the
stable demand for construction steel in the
region.
Emirates Steel adjusts its domestic rebar prices
on a month basis to compete with cheaper rebar
imports from Turkish suppliers. The state-owned
company is offering rebar to domestic consumers
at 2,245 UAE dirhams ($611) per tonne ex works for
December production and shipment.
Also, UAE re-roller Conares is offering rebar at
2,225 UAE dirhams ($606) per tonne ex works for
December rolling.
This compares with the latest Turkish rebar
import price of $595-605 per tonne cfr main Gulf
Port for December shipment. Sales have been
few and far between due to suffcient stocks
levels in the UAE.
Companies such as Emirates Steel have
invested in increasing steel production capacity
and a diversifcation of products to serve the
needs of its domestic market and to remain
competitive against low-cost imported
material.
Expansion planned
At the end of September Emirates Steel
completed the second stage of its $1.9 billion
expansion plan, which pushed its total steel
production to 3.5 million tpy.
The company aims to increase production
further to about 5.5 million tpy over the next
three years. It now has the capacity to produce 1
million tpy of jumbo and heavy sections from its
facility in Musaffah, Abu Dhabi. Production is sold
mainly to countries in the Middle East and North
Africa (Mena) region.
Demand for heavy sections in Mena countries is
now about 5.5 million tpy and is expected to
increase to 8.5 million tpy in 2020, according to
the companys estimates. The heavy sections mill
was supplied by Italian plantmaker Danieli and
will be integrated with an existing 1.4 million tpy
meltshop and 1.6 million tpy direct reduced iron
(DRI) plant (see projects article).
Level outlook
Steel demand in the Mena region is expected to
increase by 5.7% in 2012 up after a 2% fall in 2011
due political instability and is expected to grow
by 8.4% in 2013, supported by government-
funded construction projects fnanced by oil and
gas revenues, according to a joint paper by Frost &
Sullivan and the World Steel Association.
The report argues that regional production of
fnished products is expected to reach about 85
million tonnes by 2013, with crude steel
production projected at more than 50 million
tonnes up from 27.4 million tonnes in 2010.
Despite the promising growth fgures from
various industry reports and associations, traders,
stockists and distributors in the GCC region have a
gloomy outlook for 2013.
Next year will be as dull as 2012, Im optimistic
for 2014. I dont think well see an upswing in
demand in 2013. The overall economic situation
in all markets is not good. There is oversupply in
Japan and China. The European market is
showing no signs of improvements and its
unlikely to get better anytime soon, said a trader
in Dubai.
The US and Canadian market is ticking along. I
cant see that there will be a big jump in demand
or prices in 2013. The only thing that might
happen that will help the market is that there will
be more distributors, traders [speculators] that
will go out of business. It will calm down the
market and give it breathing space. There are too
many people fshing for business and they need
to be removed to regulate the market, he
concluded.
A second trader in Dubai agreed that the market
will remain unchanged in 2013.
The frst quarter of 2013 will stay as quiet as
2012. The second quarter of 2013 will show some
improvement. China has been dumping HRC to
the Middle East and Turkey has been selling large
volumes of rebar to the Middle East. We are
having a tough time, said a source from a pipe
producer in the GCC area.
Several market sources in the GCC region say that
they are expecting the market to remain
unchanged in 2013.
I dont think that 2013 will be any different to
2012. It will be a tough year for billet and rebar
producers and traders. The market will stay
stagnant. I dont think we will see any big price
rises or falls and there will be no volatility, which
is not good for traders, said a prominent UAE
based long products trader.
There will not be a great deal of demand.
Europe is not doing well and demand is weak
there. The USA has its problems and consumption
levels are unlikely to change any time soon. China
is not showing any signs of cutting production
which will add to the oversupply problem. I dont
think there will be a great deal of excitement in
2013, he concluded.
The author is senior correspondent for
Metal Bulletins sister publication Steel First
I dont think that 2013 will be any
different to 2012. It will be a tough
year for billet and rebar producers
and traders
GULF CO-OPERATION COUNCIL AREA IMPORT PRICES*
6
/
1
2
/
1
1

6
/
2
/
1
2

6
/
4
/
1
2

6
/
6
/
1
2

6
/
8
/
1
2

6
/
1
0
/
1
2

2
7
/
1
1
/
1
2

500
600
700
550
650
750
800
Billet
Rebar
Hot rolled coil
$

/
t
o
n
n
e
Source: Metal Bulletin *cfr main Gulf port
www.danieli.com
DANIELI ENGINEERING AND DANIELI CONSTRUCTION INTERNATIONAL TURNKEY PROJECTS
TRULY ENSURE OVERALL INTEGRATED PLANT PERFORMANCES,
SAFETY AND OPERABILITY IN ADDITION TO OPTIMIZED AND GUARANTEED PROJECT FINAL COSTS
AND COMPLETION SCHEDULE.
ESI 1 and 2, UAE
Two DRI-based minimills
featuring EAF hot charge
for the production of 3.2 Mtpy
of heavy sections, rebars and
wirerod. 45,000 tons of steel
structural buildings, 300,000
m
3
of concrete works.
Full LSTK project including
all auxiliary plants, systems
and plant infrastructures.
Jesco, Saudi Arabia
400,000-tpy seamless pipe
complex featuring FQM
Fine Quality Mill for the
production of 16 steel
pipes and finishing lines.
Full LSTK project
including all auxiliary
plants, systems and plant
infrastructures.
Ezz Flat, Egypt
1-Mtpy minimill complex
for hot band featuring thin
slab casting-rolling process.
New DRI plant and
expansion for long product
production.
TK project including all
auxiliary plants, systems
and plant infrastructures.
Sabic (Hadeed), Saudi Arabia
1-Mtpy minimill for bar
and wirerod production.
New meltshop and rolling
mill expansion (second
rolling mill).
Full LSTK project including
all auxiliary plants, systems
and plant infrastructures.
DANIELI TURNKEY PROJECTS
SINGLE-POINT RESPONSIBILITY
FOR A RELIABLE SCHEDULE
AND COST CONTROL
Four main references out of total 134, worldwide
Turnkey plants
and Systems Engineering
Turnkey construction,
Erection and Systems Engineering
Danieli Headquarters
33042 Buttrio (Udine) Italy
Tel (39) 0432.1958111
DCI_TK plants_418_274_MB_Layout 1 29/11/12 14.42 Pagina 1
www.danieli.com
DANIELI ENGINEERING AND DANIELI CONSTRUCTION INTERNATIONAL TURNKEY PROJECTS
TRULY ENSURE OVERALL INTEGRATED PLANT PERFORMANCES,
SAFETY AND OPERABILITY IN ADDITION TO OPTIMIZED AND GUARANTEED PROJECT FINAL COSTS
AND COMPLETION SCHEDULE.
ESI 1 and 2, UAE
Two DRI-based minimills
featuring EAF hot charge
for the production of 3.2 Mtpy
of heavy sections, rebars and
wirerod. 45,000 tons of steel
structural buildings, 300,000
m
3
of concrete works.
Full LSTK project including
all auxiliary plants, systems
and plant infrastructures.
Jesco, Saudi Arabia
400,000-tpy seamless pipe
complex featuring FQM
Fine Quality Mill for the
production of 16 steel
pipes and finishing lines.
Full LSTK project
including all auxiliary
plants, systems and plant
infrastructures.
Ezz Flat, Egypt
1-Mtpy minimill complex
for hot band featuring thin
slab casting-rolling process.
New DRI plant and
expansion for long product
production.
TK project including all
auxiliary plants, systems
and plant infrastructures.
Sabic (Hadeed), Saudi Arabia
1-Mtpy minimill for bar
and wirerod production.
New meltshop and rolling
mill expansion (second
rolling mill).
Full LSTK project including
all auxiliary plants, systems
and plant infrastructures.
DANIELI TURNKEY PROJECTS
SINGLE-POINT RESPONSIBILITY
FOR A RELIABLE SCHEDULE
AND COST CONTROL
Four main references out of total 134, worldwide
Turnkey plants
and Systems Engineering
Turnkey construction,
Erection and Systems Engineering
Danieli Headquarters
33042 Buttrio (Udine) Italy
Tel (39) 0432.1958111
DCI_TK plants_418_274_MB_Layout 1 29/11/12 14.42 Pagina 1
14 | Middle East Steel | December 2012
Middle East Steel 2012
Project review
Algeria
ArcelorMittal Annaba, Algerias sole steel
producer, is undergoing a $500 million
investment to increase its steelmaking capacity
from 1 million to 1.4 million tpy by 2014. This will
involve blast furnace relining, revamping the
sinter plant and installing a new coke battery.
The expansion will focus on long products,
although the company makes a wide range of
products including hot-rolled and cold-rolled
sheet and coil, hot-dip galvanized coil, tinplate,
and OCTG/tube and pipe. Commissioning is
expected from 2013.
With the government investing in several large
infrastructure and housing projects, local steel
demand is being boosted, attracting the
attention of other steelmakers.
Qatar Steel is studying the possibility of
establishing a 2.5 million tpy rebar mill in
Algeria. A new government-owned joint
venture between Qatar Steel and Qatar Mining
called Qatar Steel International has been
formed, which will have a 39% stake in the
plant, with the Algerian government holding
the remaining 61%.
It is envisaged that the plant will initially
produce 2.5 million tpy of rebar and then later
double capacity with the addition of 2.5 million
tpy of fat-rolled products, a Qasco spokesman
told Metal Bulletin in July.
Bahrain
Since construction is one of the biggest areas of
activity in the Middle East, it is not surprising to
fnd further investments in the types of steel
required in this sector. Although there are many
regional bar and light section producers, heavy
sections and beams have been absent from the
product mix until recently. This gap is now being
flled by Emirates Steel in the UAE, which started
up its 1 million tpy heavy sections mill in January,
and now the United Steel Company (Sulb) in
Bahrain is commissioning its 850,000 tpy beams
and sections mini-mill.
Sulb is owned 51% by the Gulf United Steel
Holding Company (Foulath) and 49% by
Japanese heavy sections producer Yamato
Kogyo. Foulath is also the sole owner of the two
Gulf Industrial Investment Co iron ore pelletizing
plants which are adjacent to the Sulb steel mill
at the Hidd Industrial Area. These pelletizing
plants, of total capacity 11 million tpy, will supply
a 1.5 million tpy Midrex DRI plant, which will in
turn provide feedstock for Sulbs 850,000 tpy
EAF.
The Sulb mini-mill comprises a 120-tonne
ultra-high-power EAF and ladle furnace. The
bloom/beam blank caster was originally
designed for three strands, but was upgraded to
four strands some six months after ordering. The
heavy section mill has an initial capacity of
600,000 tpy and will eventually be capable of 1
million tpy, says Foulath. The mill is said to be
highly fexible in terms of product mix and sizes,
and the line is designed for programme changes
in just 20 minutes. SMS Concast supplied the
meltshop and SMS Meer the rolling mill.
Integrated from iron ore pellets to fnished
products, Sulb will be the lowest-cost producer
of its type in the world, the company claims,
and when fully operational will replace about
14% of the medium and heavy beams being
imported into the Middle East.
Egypt
Egypt is the home of Ezz Steel, the largest
independent steel producer in the Mena region
with a total capacity of 5.8 million tpy of
fnished steel, including 3.5 million tpy of long
and 2.3 million tpy of fat-rolled products.
The companys planned next stage of
investment is a 1.9 million tpy Energiron III DRI
module at its Ezz Flat Steel (EFS) plant, Ain
Sokhna, near Suez, to provide feedstock for both
the EFS mini-mill (which is also to be expanded
in capacity) and another group mini-mill at Ezz
Steel Rebars. Phase 2 involves erecting another
DRI module at the same site to supply the
Regional expansion and
diversification abound
Steel companies across the Middle East and North Africa are increasing
capacities and widening product ranges in response to local markets and
anticipated demand. Steve Karpel reviews projects that have come on stream
this year and what is moving through the pipeline for the near future
Suez Steels DRI-based steelmaking complex will feature a 1.95 million tpy Energiron module
feeding a 1.3 million tpy meltshop for long products
S
U
E
Z

S
T
E
E
L
December 2012 | Middle East Steel | 15
expanded EFS meltshop. The two new DRI
modules will reduce these steel plants
dependency on imported scrap.
The overthrow of the Mubarak regime in Egypt,
however, resulted in legal obstructions to these
investments arising from allegations that the
DRI construction licences were acquired from
the then-government illegally. Egypts Court of
First Instance annulled both licences in
September 2011, since when construction has
stopped, with the frst DRI plant 80% complete.
The court also annulled the DRI licences that had
been awarded at the same time (2008) to three
other Egyptian steelmakers, including Beshay
Steel and Suez Steel.
Ezz Steel announced last month that the court
had awarded a new licence on 14 November,
replacing the annulled one, to company
subsidiary Ezz Rolling Mills for the construction
of the DRI plant plus additional meltshop
facilities at Ain Sokhna. The licence terms require
a total payment of EGP 330 million over the next
six and a half years.
The licensing dispute has not affected the
normal operations of Ezz Steel, which reported a
10% increase in net sales in the frst half of 2012
to EGP 10.31 billion ($1.72 billion), although
Ebitda fell by 11% to EGP 1.1 billion.
A new licence was also awarded to Suez Steel
in mid-year. The steelmaker, a part of the Solb
Misr group, is building a 1.95 million py HYL/
Energiron DRI plant linked to a 1.3 million tpy
billet and beam blank meltshop.
The new integrated steel mill is almost
fnished, and is expected to start up early in
2013, bringing the companys steelmaking
capacity up to 2 million tpy. Products will supply
the Egyptian market, with any surplus billet
exported to the local region, says a spokesman.
Other investments in Egypt are proceeding.
Rebar roller Elmarakby Steel has ordered a
350,000 tpy meltshop from SMS Siemag to
produce 130 sq mm billet. This will supply its
240,000 tpy rolling mill in 6
th
of October City, with
excess billet to be sold on the market pending
the construction of a second rolling mill. The
meltshop is expected to start up by December
2013, fed by imported scrap.
Iraq
The steady rebuilding of Iraqs infrastructure has
meant a continuing focus on the basic industries
such as steel, cement and power, as well as its
dominant economic base oil and gas. One of
the major steel projects is by Iraqs Mass Global
Investment, which has been active in the
cement and power sectors with several plants
completed or in progress. Turning its attention
to steel, it is building a 1 million tpy mini-mill in
the north of the country (Kurdistan), which will
focus initially on rebar.
The mill, supplied by Danieli with power
supply by ABB, comprises a 120-tonne FastArc
EAF, a 120-tonne ladle furnace, a 5-strand
FastCast caster for 130 mm and 150 mm sq
billet, a 120 tph walking hearth furnace and a
650,000 tpy rolling mill for 10-32 mm diameter
deformed bars. The mill is scheduled to start up
in the second half of 2013, says Mass Global. The
company is also constructing another rolling
mill for small and medium sections, which is
expected to start in early 2014.
The EAF will be scrap-fed, but the company is
studying the possibility of building a DRI plant,
together with an iron ore pelletizing facility. It
also says that it plans to double the mini-mill
steel capacity eventually.
Indian pipemaker Jindal Saw has instigated a
$200 million project to build a new pipe mill in
Iraq, sited in a new industrial city outside Basra.
It will produce 300,000-350,000 tpy of
longitudinal submerged arc-welded pipe,
16-65in (406-1,651 mm) in diameter with wall
thickness up to 1in. It is planned to start up at
the end of 2013, while an anti-corrosion coating
line will commission earlier in the year.
Fully-owned by Jindal Saw, the company will
sell into Iraqs oil and gas transmission sector.
An expansion phase is also planned six months
after start-up with the introduction of hot
induction bending, and the company says it
intends to add spiral welded pipe as well at a
later stage.
Oman
One of the biggest planned investments in the
region is the Jindal Shadeed integrated steel mill
in Oman, which will eventually comprise a 7
million tpy iron ore pelletizing plant, a Midrex
DRI/HBI plant, a 2 million tpy meltshop and a
long products rolling mill.
Indias Jindal Steel & Power (JSPL) acquired the
Shadeed DRI project for $464 million in 2010, and
the 1.5 million tpy Midrex DRI/HBI module
started up at the end of that year. Prior to the
meltshop commissioning next year, Shadeed
has been exporting the HBI produced just over
1 million tonnes were sold last year.
JSPL is now engaged in expanding the project
at Sohar Industrial Port into a complete
steelmaking complex, and a 2.0 million tpy
meltshop is scheduled to commission in the

Assembling the 120 tonne EAF at United Steel Co, Bahrain (Sulb)
S
M
S

S
I
E
M
A
G
The Sulb mini-mill includes an effcient dedusting plant
S
M
S

S
I
E
M
A
G
a new Era in industrial drive solutions is dawning
As of June 1
st
we are part of the Nidec group, strengthening our market presence:
we are ready to help our customers form the future with precision and control.
110393-AnsaldoNidec215x280-Metals.indd 1 29-11-2012 12:55:06
Middle East Steel 2012
Project review
December 2012 | Middle East Steel | 17
fnal quarter of 2013. The Danieli-built meltshop
will be fed directly by hot DRI, and comprise a
150-tonne EAF, a 150-tonne ladle furnace, a
200-tonne twin-tank vacuum degasser, and a 2
million tpy 6-strand billet/bloom caster. The
associated infrastructure also includes an air
separation plant, a 4,800 cu metre/day
desalination plant and extensive port facilities.
The semis produced will be initially targeted
mainly at the Saudi market, as well as domestic
re-rollers supplying Omans infrastructure
projects. In time, however, it is planned that
much of the billet produced will be taken up by
a 1 million tpy rolling mill for rebar and merchant
bar, plus a seamless pipe mill, which are
expected to start around 2015. These represent a
$400 million investment, while the meltshop is
put at $475 million.
Jindal foresees the DRI plant expanding from
1.5 million to 5 million tpy over the next fve
years, which will be fed by a 7 million tpy iron
ore pelletizing plant now in the planning stage.
Like several steel mills in the region, Omans
Sohar Steel started out as a pure rolling mill for
rebar, and has since integrated back into
steelmaking. The rolling company, Sharq Sohar
Steel Rolling Mills (SSSRM), has a capacity for
300,000 tpy of 8-32 mm diameter rebar, which
can be epoxy coated. Sister company Sohar Steel
was built with a 36-tonne EAF and ladle furnace
feeding a 3-strand caster for 100, 120 and 130
mm sq billet. It can produce 250,000 tpy of
billet.
Sohar Steel is now being upgraded by Danieli
Centro Met with a 75-tonne FastArc EAF,
increasing steel output to 700,000 tpy. Danieli is
also supplying a 140-tonne teeming crane to
handle the larger tapping weights. The new
meltshop is due to start up in mid-2013.
The port of Sohar is developing into a focus for
steel products in the Gulf, with Al Jazeera Steel
Products also being established there. This
company buys billet and has four ERW
tubemaking lines with a total capacity of
300,000 tpy of international-standard tube
products with plain, threaded and coupled
ends. It also has three galvanizing lines for
corrosion-protected tube up to 219 mm
diameter.
Al Jazeera Steel has subsequently
commissioned a 300,000 tpy merchant bar mill
for producing angles, channels, squares, fats
and rounds. The company says it is exporting
products to 25 countries, including North
America, Europe and Australia.
Qatar
Qatar Steel (Qasco) started production in 1978 as
one of the frst DRI-based integrated
steelmakers in the Gulf, and has continued to
augment its capabilities, both in Qatar and also
elsewhere in the region: it established a
subsidiary rolling mill Qatar Steel Co FZE in
Dubai in 2003.
Last year the company awarded Siemens VAI a
contract to supply a new 1.1 million tpy billet
meltshop for its Mesaieed site, comprising a
110-tonne EAF, a 110-tonne ladle furnace, a
6-strand billet caster plus a new dedusting
plant and all auxiliary equipment. This new mill
is expected to go into operation in 2013.
The $250 million investment was originally
intended to replace the companys existing
meltshop in Mesaieed, but because of
increasing steel demand in the Gulf, it has been
decided to employ it as an additional facility,
with the original 95-tonne EAF and ladle
furnaces ordered also being enlarged to 110
tonnes. Qatar Steels current capacities are 2.4
million tpy of DRI/HBI, 1.9 million tpy of raw
steel, 1.8 million tpy of rebar and 0.3 million tpy
of wire rod.
Looking further afeld, Qatar Steel is also
studying the possibility of establishing a 2.5
million tpy rebar mill in Algeria (see earlier
section in article).
Saudi Arabia
The Kingdoms biggest steel company, Saudi
Iron & Steel Co (Hadeed) is continuing to invest
in new capacity to meet the needs of its
domestic market. A new 1 million tpy mini-mill
from Danieli is under construction at Al-Jubail,
consisting of a 150-tonne EAF, a 150-tonne ladle
furnace, a 6-strand caster for 130 mm and 150
mm sq billet, with materials handling for
ferro-alloys and cold DRI, and fume treatment
facilities.
A 120 tph walking beam furnace will charge
directly into an 18-stand wire rod rolling mill.
This rolling mill is being put together by
upgrading and augmenting an existing rolling
mill. The new wire rod mini-mill is in the fnal
stages of construction and is expected to start up
in the second quarter.
This investment will increase Hadeeds total
capacity to 6 million tpy, with long products
accounting for two-thirds of this. The new plant
will also make Hadeed self-suffcient in billet,
says Abdulaziz Al-Humaid, Hadeed chairman
and Sabic executive vp for metals: We import
400,000 tpy of billet, but we will substitute
these imports and produce about 4 million tpy
of both billet and fnished long products, he
says.
Alongside other grades, the new rolling mill
will produce high-carbon wire rod, which is
now imported. The Saudi market for this is
estimated at some 200,000 tpy.
Hadeed has fve DRI modules with total
capacity of about 5.4 million tpy. The company
uses a mix of DRI and scrap in its fve electric arc
furnaces; the ratio varies according to product,
but averages about 20% scrap, which is
imported. We import about 600,000 tpy of
scrap now, but when the new mini-mill starts
up, an additional 600,000 tpy of imported scrap
may be needed, Al-Humaid says, and points
out that most of Hadeeds products, 95-96%,
are sold to its domestic market.
Another Saudi steelmaker, Rajhi Steel,
commissioned a 1.0 million tpy high-speed bar
and rod mill in May at its site at Alkhumra, south
of Jeddah. It produces 10-40 mm diameter
debar, and 5.5-16.0 mm smooth and deformed
wire rod. In order to feed this mill, the
companys 0.85 million tpy meltshop here has
been upgraded to produce more billet, with a
200 tph walking beam reheat furnace connected
directly to the billet caster. All plant has been
Saudi Iron & Steels latest investment will make it self-suffcient in billet and introduce new long
product grades
S
A
B
I
C

Excellent engineering services stand out from the crowd

especially when it comes to intelligent revamps. Its about
nothing less than upgrading existing plants to meet future
market demands one of todays central challenges.
Thats where our whole wealth of experience comes in.
After all, our job is to help you increase your productivity
while improving quality. Equally signicant here is smart
planning, for instance taking advantage of scheduled main-
tenance stoppages and minimizing production losses.
Your bottom line: You save time and money.
Countless completed projects prove our quality and
reliability as a global specialist in metallurgical plant and
rolling mill technology.
Modernizations for quality and reliability
Boost productivity.
Cut costs.
SMS SIEMAG AG
Eduard-Schloemann-Strasse 4 Phone: +49 211 881- 0 E-mail: communications@sms-siemag.com
40237 Dsseldorf, Germany Fax: +49 211 881- 4902 Internet: www.sms-siemag.com
Modernisierung_209x274_e.indd 1 19.11.12 11:06
Middle East Steel 2012
Project review
December 2012 | Middle East Steel | 19
supplied by Danieli, which also designed a 4,000
HP 120 tph scrap shredder for the steelmaker.
The company has another 1 million tpy
mini-mill for Jeddah in the feasibility study
phase.
Sister company Rajhi Heavy Industry and
Indias state-owned Rashriya Ispat Nigam (RINL,
or Vizag Steel) are discussing the possibility of a
joint-venture 3 million tpy integrated DRI-fed
steel mill to be built in Saudi Arabia. The
$8 billion plant would take fve years to build,
and produce long and fat-rolled products.
ArcelorMittal and Saudi Arabias Al Tanmiah
Industrial and Commercial Investment Co plan to
commission their joint venture 600,000 tpy
seamless pipe plant in 2013. The $800 million
mill, based in Jubail Industrial City 2, will supply
its oil, gas and petrochemicals industries.
United Arab Emirates
One of the fastest-growing operations in the
region is Emirates Steel (ESI) of Abu Dhabi.
Starting out with a single 500,000 tpy rolling mill
commissioned in 2001, the company 100%
owned by Abu Dhabi Basic Industries Corp, a
subsidiary of General Holding Corporation has
subsequently pursued a policy of establishing
integrated DRI-fed mini-mills, and rolling a
widening range of products at its site in
Mussafah.
The phase 1 expansion, inaugurated in 2009,
comprised a 1.6 million tpy HYL/Energiron DRI
plant, a 1.4 million tpy meltshop and rolling mills
for rebar (0.62 million tpy) and wire rod (0.48
million tpy).
The phase 2 expansion commissioned in March
2011 consisted of another mini-mill of similar
size: a 1.6 million tpy Energiron DRI plant,
feeding a Danieli meltshop consisting of a
150-tonne FastArc EAF and a 5-strand
FastCast caster for billet, blooms and beam
blanks. The frst two expansion phases represent
a $2.45 billion investment, giving Emirates Steel a
nominal 3.2 million tpy of DRI capacity and 2.8
million tpy of steelmaking capacity, with 3
million tpy of rolling capacity.
The beam blanks from the second conticaster
are now feeding a 1 million tpy heavy sections
mill which was commissioned in January 2012
the frst such rolling mill in the region. The
blanks are reheated in a 250 tph walking beam
furnace. The $650 million Danieli heavy sections
mill produces parallel-fange beams, columns
and sheet piles with web depths up to 1,016 mm
and fange widths up to 419 mm, plus up to 430
mm parallel-fange channels, 250 mm angles,
750 mm U-sheet piles and 630 mm Z-sheet piles.
The heavy sections mill comprises a single
reversing stand breakdown mill and an
ultra-fexible reversing pre-fnishing/fnishing
mill made up of three coupled universal stands.
Auxiliary plant includes a gauge unit for
closed-loop control, cooling bed, in-line
straightener, cutting-to-length, automatic
stacking and collection.
Demand for medium and heavy sections will
be over 4 million tonnes this year in the Middle
East, with the UAE and Saudi Arabia the biggest
consumers, and demand for heavy sections in
the GCC region is expected to double by 2015.
Both of Emirates Steels DRI plants are now
being upgraded from 1.6 million to 2.0 million
tpy, which should be completed in 2013. The
corresponding meltshops are also being
expanded from 1.4 million to 1.7 million tpy. The
upgrades are being carried out by Danieli.
Without pausing for breath, Emirates Steel is
now planning phase 3 of its expansion,
announced in September 2011: this will mark a
move into fat-rolled products with a hot-rolled
coil mill, and a slab meltshop fed by another DRI
plant. The future production of plate is also
envisaged. This investment would add about 1.6
million tpy to the companys existing 3 million
tpy of steelmaking capacity. While still in the
planning stage, this next phase is likely to
commission from 2014 onwards.
Emirates Steels growing output and range of
products has increased its share of its domestic
market to 60%, the company stated last month,
with its steel output rising 33% year-on-year in
the frst three quarters. Around 70% of its
fnished products are sold on the domestic
market, with the rest exported.
Elsewhere in the UAE, Al Ghurair Steel, a
producer of pickled and oiled hot-rolled,
cold-rolled and galvanized sheet and coil, is
expanding its operations in Mussafah, Abu
Dhabi, to double galvanizing capacity to
400,000 tpy, and raise cold rolling capacity to the
same level from 250,000 tpy. This expansion is
expected to commission next year. The company
is owned 80% by the Al Ghurair Group and 20%
by Nippon Steel & Sumitomo Metal Corp of
Japan.
Capacities for value-added products such as
galvanized coil are rising
A
L

G
H
U
R
A
I
R

S
T
E
E
L
Breakdown mill at ESIs heavy section mill
D
A
N
I
E
L
I
Emirates Steels (ESIs) new conticaster produces beam blanks for the heavy sections mill
E
M
I
R
A
T
E
S

S
T
E
E
L
Real Innovation, Real Solutions
Real Progress.
Learn more at: www.midrex.com
2012 Midrex Technologies, Inc. All rights reserved.
These are our technologies,
these are our results.
While others boast of technical advancements, Midrex delivers real world results for the steel
industry. MIDREX Plants provide energy efciency and exibility, from natural gas to various
options for using coal, including gasiers, coke ovens or BOFs.
Steelmakers worldwide rely on Midrex.
Hot DRI for increased EAF
production & environmental
benets with multiple hot
DRI transport options
installed and proven
HBI with outstanding
chemical & physical quality
Modules operating more than
8,000 hours annually with
available capacity up to
2.5 MTPY
Coal-based DRI, HBI &
Hot DRI production via
and COREX/
MIDREX
pion
eerin
g
forward
-thin
kin
g
proven
Metal Bulletin full 10.12.indd 1 10/26/12 10:41 AM
Middle East Steel 2012
DRI
December 2012 | Middle East Steel | 21
The production of direct reduced iron, DRI, as
a feedstock for steelmaking continues to grow
in the Mena region. With its large gas reserves,
it is no surprise that this region is becoming a
particular focus for gas-based DRI
technologies such as Midrex and Energiron,
while India with its coal reserves is a rapidly-
growing centre for coal-based reduction.
The relative paucity of local steel scrap in
many Mena countries has been another
incentive to invest in DRI production, which,
when used in electric arc furnaces
sometimes combined with a proportion of
imported scrap is seen as the most
economic way to make steel.
Last year the Mena area produced over 25
million tonnes of DRI, out of a world total of
over 73 million tonnes. However, this Mena
volume represents nearly 45% of all
gas-based production, which amounted to
56 million tonnes last year, according to
Midrex.
The biggest DRI producer in the region is
Iran, an early developer and user of direct
reduction technology. Today, the country has
more projects in construction, including
Midrex process modules at Arfa Steel (0.8
million tpy) and a second module at Khorasan
Steel (0.8 million tpy) following the frst
module that started up in 2010. Another 0.8
million tpy plant using the Midrex process
started up recently at Iranian Ghadir Iron &
Steel (Igisco) in Yazd.
DRI technology has evolved so that many
steelmakers are now able to hot-charge the
material directly at 600C or higher into the
electric arc furnace. This saves energy and has
several benefts, says Midrex: an increase in
EAF productivity by 15-20%; reduced EAF
electricity requirements by 120-140 kWh/
tonne of steel; reduced electrode
consumption by 0.5-0.6 kg/tonne of steel;
and reduced EAF refractory consumption by
1.8-2.0 kg/tonne of steel.
Hot or cold
Increasingly fexible plants are also able to
produce either hot or cold DRI, or both
simultaneously, according to market or
production conditions. Some plants are also
designed to produce merchant hot briquetted
iron (HBI) as an alternative for any surplus
DRI.
Saudi Iron & Steel (Hadeed), for example,
now has fve Midrex DRI modules, the largest
of which is now producing 2 million tpy this
is hot-linked to an EAF. The company is now
revamping one of the modules in order to
increase its output, says Hadeed chairman
Abdulaziz Al-Humaid, although the
impending increase in steel capacity from its
new 1 million tpy billet mini-mill means that
the steelmaker will still have to raise its scrap
purchases to top up the DRI feed (see page 14).
In Egypt, the natural gas resources offshore
inspired an early use of DRI from the 1980s, to
feed electric steelmaking at the
then-Alexandria Iron & Steel, now EZDK, part
of the Ezz Steel group. The groups investment
in DRI has subsequently grown along with its
build-up of EAF capacity.
Most recently, subsidiary Ezz Rolling Mills
has been building a 1.9 million tpy HYL/
Energiron module at Ain Sokhna to feed both
Ezz Flat Steel (which is adding a 1.3 million tpy
meltshop) and other mini-mills in the group.
This module was about 80% complete when
an Egyptian court revoked the construction
licences in 2008. However, the issue was
resolved last month and the licence
re-awarded, so that construction can now
proceed.
Direct reduction is
the primary choice
A range of factors not least the cost-effective
local availability of natural gas has led to the
growing popularity of direct reduced iron as a
main feedstock for steelmaking in the Mena
region. Steve Karpel looks at the overall picture
and some recent investments
The Jindal Shadeed 1.5 million tpy Midrex reduction plant in Sohar, Oman, was the frst Hotlink

system for feeding hot DRI to an EAF when it started up last year
MIDREX REDUCTION WITH
HOTLINK

J
I
N
D
A
L

S
H
A
D
E
E
D

The Midrex process with Hotlink transfer of DRI

to the EAF
K
O
B
E
L
C
O
Middle East Steel 2012
DRI
22 | Middle East Steel | December 2012
This implies that the DRI licences for other
Egyptian steelmakers which were annulled at
the same time could also be re-awarded. One
of the projects was a 1.76 million tpy Midrex
plant for Egyptian Sponge Iron & Steel Co
(Esisco, owned by the Beshay group) in Sadat
City. Another project, for a 1.95 million tpy
Danieli/Tenova HYL/Energiron plant for Suez
Steel in Attaka, had its licence re-awarded in
mid-year, and a Suez Steel spokesman
expects both the DRI plant and new meltshop
to start up early in 2013. The latter module is
reported to be complete, and training of
personnel is under way.
Another DRI plant which is just about to
commission is the United Steel Company of
Bahrains 1.5 million tpy Midrex plant, which
will feed a meltshop with 0.8 million tpy
heavy sections rolling mill. Nameplate
capacities for DRI plants are often
conservative, and 51% owner Gulf United
Steel Holding Company (Foulath) states that
the module will actually be capable of
producing 1.8 million tpy. The plant has an
adjacent source of iron ore pellets from the
Gulf Industrial Investment Company (GIIC),
the 11.0 million tpy pelletizing company
which is wholly owned by Foulath.
Flexible facilities
A modern example of the fexible DRI
modules now being built are the two
Energiron plants that started up at Emirates
Steel, Abu Dhabi, in 2009 and 2011. These 1.6
million tpy modules can produce either cold
DRI or hot product charged directly to the
electric arc furnaces. They are now being
upgraded to 2 million tpy each, which should
be complete in 2013.
Cold DRI is stored in an open stockyard and
transferred to the meltshops by means of belt
conveyors. Hot DRI can be discharged at 700C
and sent directly to either the meltshop or
the cooler; the Energiron plant uses the
enclosed Hytemp

pneumatic transport for

handling hot DRI, developed jointly by
Danieli and Tenova HYL.
The direct reduction process uses a steam
reformer to convert natural gas into the
hydrogen and carbon monoxide reducing
agents, which reduce the iron oxide to
(impure) iron inside the reactor. In the
process, wet reformed gas is frst dried in a
quench tower and then injected into the
circuit, where it joins the recycled gas coming
from the reactor.
The reducing gas is heated and sent to the
reactor distribution ring. Oxygen injection is
provided between the heater and reactor in
order to increase the gas carburization
potential when higher percentages of carbon
above 2.5% are required by the
meltshop.
The top gas leaving the reactor is treated to
clean it and remove the water and carbon
dioxide formed in the reactions. Its heat
content is recovered and delivered to the
process gas heater. This treated gas, having
been cleaned of dust, is sent to a carbon
dioxide absorber where this gas is removed
by a liquid absorber. This absorber also
removes hydrogen sulphide, giving an almost
sulphur-free process gas and minimising
sulphur addition to the DRI.
The gas leaving the absorber is free of
oxidised components and has regained its
reduction potential. It then rejoins the
reformed gas and passes again through the
process gas heater, forming a closed loop.
Shortly after commissioning, the plant was
able to better most of its nameplate
guaranteed parameters, says Danieli. It
achieved a 250 tph capacity, compared with a
guarantee of 200 tph. DRI metallization was
above 94%, with carbon content above
2.5%. Natural gas consumption was 2.45
Gcal/tonne compared with a guaranteed 2.6
Gcal/tonne, and electrical energy
consumption was 25 kWh/tonne against a
guaranteed 35 kWh/tonne.
Oman frst
The frst Hotlink

Midrex DRI plant was the

1.50 million tpy module at Jindal Shadeed in
Oman, which commissioned at the end of
2010. The plant, with its adjacent steel plant
now being built, is situated at Sohar Port,
with a dedicated quay having a draft of 19
metres. This means that it can receive
Capesize vessels of 180,000 dwt, which the
company claims results in substantially
reduced costs of raw materials.
A Capesize vessel can be discharged within
fve working days, and the raw material
handling and stacking system is designed to
handle 3,600 tph. The discharge facility
comprises two ship unloaders, plus belt
conveyors and a stacker/reclaimer.
The raw material furnace charging facility is
designed for a capacity of 400 tph, with
weigh feeders, vibro screens, belt conveyors
and hoppers.
The Hotlink system delivers hot DRI at 650C
by gravity feed to the EAF, in a fully sealed link
(see diagram). The DRI can also be fed to a
briquette machine for producing hot
briquetted iron, HBI. The capacity was
designed for a production rate of 187.5 tph,
allowing for 1.1 million tpy of hot DRI and 0.4
million tpy of HBI. The port loading facility
can handle 850 tph of HBI, with a soft loading
facility of 1,600 tph being built.
Shadeed points to various features of its
direct reduction plant which have been
designed for increased productivity and
product quality. Combustion air is preheated
to 675C and feed gas to 580C. An oxygen
injection system with ten injection nozzles
for the bustle reduction gas is used to
increase bustle gas temperature: this allows
for increased productivity while maintaining
product quality. An oxygen fow of up to
4,000 cu metres/h is employed. The gas
reformer consists of 16 bays with 30 tubes per
bay.
Higher reduction temperatures are assisted
by the on-site iron ore pellet coating system,
which coats the iron oxide pellets with lime
solution, at a design rate of 1.5 kg/tonne of
iron ore. A coating of lime hydrate on the
pellets allows a signifcant increase in
reducing gas temperature, says Midrex, which
results in a production increase of up to 20%.
The DRIs nominal specifcation is 93%
minimum metallization with 1.5% minimum
carbon, and a discharge temperature of
650C.
Other plant which has been built as part of
the greenfeld steel complex includes an air
separation plant and 4,800 cu metre/day
desalination plant.
DRI PRODUCTION
*
Country 2009 2010 2011
Egypt 2.91 2.86 2.97
Iran 8.20 9.35 10.37
Libya 1.11 1.27 0.30
Oman - - 1.11
Qatar 2.10 2.16 2.23
Saudi Arabia 5.03 5.51 5.81
UAE - 1.18 2.25
World total 64.44 70.37 73.32
*million tonnes. Includes HBI. Source: Midrex Technologies
The second 1.6 million tpy Tenova HYL DRI
module at Emirates Steel in Abu Dhabi started
up this year, and, along with the frst identical
module, is already being expanded to produce
2.0 million tpy
T
E
N
O
V
A

H
Y
L
Emirates Steel Industry Magazine Ad.pdf 1 12/4/12 3:58 PM