The slump in the Gulf’s construction industry due to the economic slowdown could see the demand for steel drop by as much as 35%, according to analysts.
The Dubai Multi Commodities Centre (DMCC) estimated that steel consumption in the region could drop to 9 million tonnes this year -- down from about 14 million tonnes in 2008.
"It's obvious to most that demand will come off with announced slowdowns - less on-site consumption occurring per active project, stoppages of active projects, and less building project starts," said John Short, executive director for steel at DMCC.
Construction in parts of the region has slowed with projects delayed or even cancelled. A report by the research firm Proleads stated that US $582 billion (AED2 trillion) worth of projects in the UAE are now on hold. But, this is not indicative of the entire region as countries like Abu Dhabi are continuing to see growth.
Short said the construction industry accounted for more than 80% of Gulf steel demand.
Steel rebar prices are now below $500 a tonne, down from the peak of around $1200 a tonne seen in the fourth quarter of 2008.
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