Buoyed by the improving scenario in the global and regional construction sector, Saudi-based United Gulf Steel (UGS) – which claims to be the only medium section structural steel mill in the GCC – looks forward to a period of growth and expansion.

The company, which had doubled its turnover last year, is looking forward to post an impressive 40 per cent growth in turnover, this year.
“Production in 2003 was around 300,000 tonnes and this year we’re targeting an output of 320,000 tonnes with improved market penetration in key segments,” says a company spokesman.
“Last year, sales within Saudi Arabia accounted for 70 per cent of the company’s production, with the remaining 30 per cent absorbed by UGS’ export markets in the region. It is likely that the market percentages will remain unchanged this year as well,” he adds. 
UGS, which had a 55 per share of the GCC market and a dominating 65 per cent share of the Saudi market last year, expects this year’s results to show a considerable growth.
Although much of the company’s exports have been channelled into the GCC states, the company has made attempts at tapping the newer markets of India, Iran, Jordan and Sudan. “Since distant markets involve higher freight charges, exports can become worthwhile if the terms are attractive,” he says.
UGS currently has a capacity of rolling out 350,000 tonnes per year (tpy) of steel products from its production facilities in Jubail Industrial City.
Promoted by a group of entrepreneurs from the GCC countries – under the guidance of vice chairman and managing director Mazen Allahiq – the plant has invested in state-of-the-art technology supplied by Simac of Italy – a fully-owned subsidiary of SMS AG, Germany, a globally renowned supplier of steel plant equipment.
The company’s facility houses several cutting-edge technologies including an 80-tonne per hour walking hearth furnace and a 15-stand Simac rolling mill along with a host of other modern auxiliary facilities that include a state-of-the-art laboratory and a roll shop. These facilities were set up with an investment of about SR400 million ($106.6 million) in 2000. Carbon steel billets imported from various East European and Middle East sources are processed in its rolling mill for conversion into beams, channels, angles, flat bars, square bars and round bars of various grades suited to the customers requirements and specifications.
Within the past four years, the company has been able to establish itself as a clear leader in the region’s structural steel market, warding off competition from various established international steel sources, says the spokesman.
 “UGS has successfully alleviated the regional dependency on imported steel which at times were characterised by low quality. At the same time, indigenously manufactured structural steel products have supported various economic and infrastructural development projects in the booming regional market over the last couple of years,” he says.
The company’s exclusive range of structural steel medium-section products – which include IPE/IPEA/IPEAA beams (80 mm to 200 mm), UPE/UPN channels (50/80 mm to 200 mm), equal angles (40 mm to 140 mm), flat bars (60 mm to 250 mm), square bars (30 mm to 80 mm) and round bars (25 mm to 80 mm) that conform to the various international standards – are required by the fast-growing market of construction and structural projects, says the spokesman.
The product range was developed after identifying the potential applications and regional demand characteristics. The company sells directly to almost all end-users including large steel fabricators in the region mostly in pre-engineered building systems and transmission and communication tower segments. Among the end-users are fastener and irrigation equipment manufacturers. The company sells to direct consumers and small fabricators through a network of stockists spread all over the GCC region.
“The company has introduced stringent on line quality control systems and the latest testing equipment in the laboratory with the aim of manufacturing products to international standards such as ASTM, DIN, BSEN, JIS and ISO,” the spokesman says.
International quality standards and service levels have helped UGS attain the status of sole supplier for a selected product range even with large customers such as Zamil, Hidada, Kirby, Al Babtain, Saudi Building Systems, Emirates Building System and Mammut Industries
 “While most of the end-users buy directly from UGS, the company commands a dominant market share in the stockist/retail segments in Saudi Arabia and the GCC region. Regional customers are delighted to have products made available locally as it resolves a lot of uncertainty and lead time in importing from distant sources such as Poland, Japan, Korea, Ukraine, Taiwan and Turkey,” he concludes.