Lebanon

Lebanon: Steel Industry Overview

Prior to 2003, domestic demand for the commodity was partly satisfied by

Consolidated Steel Lebanon S.A.L., which operated the country’s sole rolling mill producing an average of 64,000 metric tons of steel output between 1997 and 2002. The company shut down in 2003 on high input costs. In fact, as per market sources, no production of steel takes place in Lebanon due to the elevated electricity costs (US$0.14/kwh – compared with US$0.011/kwh for Syria, US$0.028/kwh for Egypt and US$0.07/kwh for Jordan) that would put Lebanese producers at a competitive disadvantage against other steel makers in the region. This is especially the case since there are no quotas or other restrictions on imports except for a 5% custom fee.

The demand for steel in Lebanon is mainly satisfied through steel imports, given the country’s limited capacity for domestic steel production. Steel is generally imported in the form of finished products sold to the local market, with little left to export. Hence, Lebanon has always been a net importer of steel.

During the year 2010, the value of imported steel witnessed 19.4% increase to reach USD USD886 million, up from USD USD742 million in the previous year. This increase coincided with a 4.6% rise in the volume of imported steel which recorded 1,275,000 tons in 2010. Given narrow and immature local production, demand for steel import continued to rise in the following years. In the year 2011, the value of imported steel rose by 25.5% to reach USD 1,112 million, while the volume increased by 6.9% to reach 1,363,000 tons. However, the value of imported steel slightly declined in 2012, falling by 1% to reach USD 1,101 million. Yet, the volume of imported steel maintained the upward trend and witnessed 3.8% increase, recording 1,416,000 tons. Hence, the steel sector showed some resiliency to the regional turmoil witnessed in neighboring countries over the past few years.

During recent years, local steel traders have been importing steel mostly from countries of the Commonwealth of Independent States (CIS) – which includes former Soviet Union counties, with Belarus and Ukraine topping the list over the past two years. Both countries, along with Turkey, held a share of 75% of total steel imports to Lebanon. Prior to 2008, Egypt was by far the largest exporter of steel to Lebanon with an average market share of 46% between 2006 and 2007 while Ukraine held the second rank with a market share of 16%. Egypt lost its position as the main source of steel for Lebanese traders in recent years after the Egyptian government lowered energy subsidies, rendering Egyptian steel less attractive compared with the cheaper Turkish steel. In addition, the increased Egyptian domestic demand for steel has been exhausting most of the country’s production.

Over the past few years, exports of steel products have been decreasing at a CAGR of 10% to reach 21 thousand tons in 2010 as compared with 31 thousand tons in 2006. In 2008 however, exports witnessed a peak at 44 thousand tons as local steel traders increased exports to Iraq with the reconstruction activity of the country destroyed by the war kicked off.

Iron ore mining in Lebanon

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