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The construction industry had been the mainstay of regional economies for long but once the global financial meltdown swept through the region, the sector too bore the brunt of the crisis.

The steel fabrication industry also witnessed a major change in the buying patterns during this time – the waning demand from the construction sector was however offset by increasing orders from the infrastructure industry.

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Massive liquidity being pumped into the system to prop up economies manifested in the form of big-ticket infrastructure development projects being taken up in the region. They ranged from roads and railways to nuclear facilities and civic amenities.

The UAE spent 32.8 per cent of its gross domestic product in 2010, the highest level since the global financial crisis, which helped the world's third-largest oil exporter spur economic growth and further diversify away from oil.

The UAE has also recorded one of its best economic and financial eras over the past decade, with its nominal GDP, revenue and trade nearly quadrupling to emerge as one of the fastest-growing economies, a semi official study has shown.

This has resulted into the UAE becoming one of the most attractive investment destinations. According to AT Kearney's 2010 Foreign Direct Investment Confidence Index, the UAE is seen as the most attractive investment destination in the Middle East in the next three years and ranks 11th worldwide.

This expected rise in foreign investment would also help boost economic recovery and enhance investment in the infrastructure sector, which could throw up big opportunities for the metal working and steel fabrication sector.

STEelfab market - OILING THE WHEELS OF STEEL SECTOR

The oil and gas sector holds huge potential for the metal working industry. The recent spurt in oil prices has prompted crude-producing nations to invest heavily in their oil and gas projects. This new trend has even encouraged investors to resume some of the oil projects they had previously shelved or postponed because of the crisis.This has resulted in the regional metal working, metal manufacturing and steel fabrication industry being one of the major beneficiaries of booming oil & gas projects.

Official figures have shown that the UAE has become the Middle East’s second largest energy investor with its potential capital in the sector totalling around US$ 74 billion during 2011-2015.

Saudi Arabia is expected to remain the dominant investor in the oil and other energy sectors in the region as it could pump nearly US$ 130 billion in the same period, showed the figures by the Saudi-based Arab Petroleum Investment Corporation (Apicorp), an affiliate of the 10-nation Organisation of Arab Petroleum Exporting Countries.

Apicorp also sharply revised up its forecast for pan-Arab potential energy investment to US$ 530 billion during 2011-2015.

Such huge investment will see these countries press ahead with investments to pursue their capacity expansion plans and development of their production, exploration, refining, gas liquefaction and petrochemicals, and this offers good opportunities to the steel fabrication sector.

Here are some of the major oil & gas projects in the region:

	Wasit Gas Development - Saudi Arabia; expected cost US $ 6bn; completion February 2014
	Jubail Refinery and Petrochemcial Complex – Saudi Arabia; expected cost US$ 10bn; completion H2 2013
	Ruwais Refinery Expansion – UAE; US$ 10bn; 2013
	Yanbu Export Refinery, Saudi Arabia; US$ 12bn; Q3 2014
	Sour Gas Fields Development - Shah Field, UAE; US$ 10bn; 2014
	Habshan 5 Gas Processing Plant, UAE; US$ 4.7 bn; Q3 2013
	Abu Dhabi Crude Oil Pipeline, UAE; US$ 3.29bn; Q3 2011
	Petrochemicals Complex Saudi Arabia; US$ 20bn, 2015
	Das Island Process Facilities and Utilities, UAE; US$ 1.5 bn; Q4 2012
	Wasit Gas Development - Offshore Facilities as Hasbah, Saudi Arabia; cost estimate not available; February 2014

INCREASING BUSINESS FLOW

Increasing investment in oil distribution is helping the pipeline segment thrive in the region. A 2010 study found that 115 projects are under way for lines that run an average length of 435km. Here are some of the big deals:

	US$ 62 million upgrading of Idd Al Shargi North Dome Field (2012)
	US$ 505 million project for the construction of 40-inch oil pipeline from supporting substation no 131 to the liquid gas factory at Mina Al Ahmadei in Kuwait City
	US$ 140 million project for the construction of an oil pipeline and the related features in the north of Kuwait (2012)
	US$ 175 million project for an oil pipeline for the west of Kuwait (2012)
	US$ 28 million construction of an oil pipeline linking transit line 3 and the Doha power and water generating complex in the north of Kuwait

INFRASTRUCTURE BOOST

GCC countries are continuing with their expenditure on expanding their infrastructure, with their combined investment being put at US$ 3 trillion on infrastructure, leisure and tourism sector by 2020, says a report.

In the UAE, big projects like the construction of a nuclear power plant and Emirates Railway projects are set to begin this year, opening business opportunities for the steel fabrication and its affiliated industries, according to an industry projection.

In the region too, the GCC states are increasing their expenditure on infrastructure projects, including rail projects that are set to cost more than US$ 100 billion.

On the construction front, according to recent research, an estimated 1,600 projects worth over US$ 560 billion are active in the UAE. Saudi Arabia awarded around US$ 30 billion worth of construction contracts in 2010 itself and has allocated US$ 385 billion to capital expenditures for 2010-2014 period.

Qatar's successful bid to host the 2022 soccer World Cup will speed up its construction programme. Qatar will spend some US$ 100bn over the next five years, as it rushes to prepare for soccer's biggest tournament.

These mega projects are quite unprecedented in the history of the region and are set to provide rich pickings for the steel fabrication sector in the form of bulk demand for equipment, new technology and know-how.

MANUFACTURING PUSH

Manufacturing is the second strongest economic growth driver among non-oil sectors in the UAE. In terms of its GDP contribution, it raked in 12.9 per cent share in 2007 and 12.2 per cent in 2008, becoming second only to the hydrocarbon sector in both the years.

This consistent performance of the sector reflects the government’s heavy investing in the manufacturing industry. By the third quarter of 2008, an official report placed the total cumulative industrial capital value of all non-oil and gas industrial projects in the UAE to be exceeding US$ 20 billion. This new wave of manufacturers are catering for the 'new economy' providing machinery and tools for industries related to construction, shipbuilding, infrastructure, power generation and even retail.

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