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Dubai: The annual seasonal slowdown in the UAE's steel sector due to the summer lull and Ramadan is more pronounced this year due to soaring steel costs.
However, the overall consumption of the key construction material is expected to grow significantly during the next few years, said an in industry source.
According to Sameh Hassan, Madar Holdings chief executive, the current trend is not expected to change before the end of the year.
Reports indicate that while the cost of steel continues to rise, consumption in the Middle East continues to surge. By 2010 the region is expected to consume 60 million tonnes a year and produce only 35 million tonnes.
"There are more and more local production factories being set up and this will improve supply. Whether demand will continue to grow at such a rate, I cannot say," Hassan said.
Analyst Dr Khalid Maniar, a managing partner at Horwath Mak, anticipates that demand will continue to surge going forward due to the construction and infrastructure boom in the region.
"Demand will continue to be very strong... there are ongoing projects and blueprints for future projects in the pipeline so I think it will continue despite the surge in prices," he said.
He said supply currently came from two or three sources, and the UAE needed to find alternative sources to meet demand.
An upcoming steel conference from October 12 to 14 will seek to explore the issues and challenges faced by the industry.
The event is sponsored by Emirates Steel Industries and organised by the Middle East Economic Digest, a source of business intelligence for the region.
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