Gulf firms and a subsidiary of Japanese company Yamato Kogyo are in talks with banks to raise funds for a $1.2 billion steel plant planned for construction in Bahrain.

Yamato Steel is working on the project with a Gulf Arab consortium called Foulth that includes steel and chemical maker Industries Qatar and Kuwait-based Gulf Investment Corporation (GIC).
The complex will have a capacity to produce 3.5 million tonnes of steel per year. It will be built near two other steel plants owned by Foulth.
Other investors in Foulth include Kuwait’s National Industries Group and the Kharafi Group.
Steel demand in the Middle East is expected to increase from 70 million tonnes in 2007 to around 90 million tonnes in 2010. GCC steel demand will be in the range of 20-30 million tonnes during the same period.
According to a report in the Metal Bulletin Research (MBR) in its December 2006 issue, finished steel products capacity will increase by 46.7 per cent from 22.9 million tonnes in 2006 to 33.6 million tonnes in 2010. Main national capacity increases include UAE by 3.1 million tones, Egypt by 2.5 million tonnes and Saudi Arabia by 1.9 million tonnes. According to the MBR report, raw steel production is expected to reach 51.5 million tonnes and 62.9 million tonnes in 2007 and 2010 respectively.
Due to rising steel demand, which is growing at a 9 per cent rate, the Middle East is to become a net importer of semi-finished steel, mainly billet, slab and HR coils. The large increase in consumption of semis and flat products has been partly met by imports, which have risen from 6.4 million tonnes in 1997 to around 25 million tonnes in 2005 and is expected to reach 30 million tonnes this year.
According to a GIC report, GCC countries are net importers of products such as ingots, steel tubes, seamless, hot rolled rod in coil, welded tubes and cast iron pipes.