The UAE economy is still strong thanks to domestic activity. The country’s non-oil economy is expected to grow by around 4% in 2023 and will accelerate further once ongoing reforms are implemented. In October last year, the UAE’s non-oil private sector economy expanded even more, with new business and output increasing alongside rising demand and employment levels.
Despite higher inflation and interest rates, non-oil GDP growth remains stable. World Expo 2020 and the relaxation of COVID-related restrictions boosted the economy in the early part of last year and the momentum was maintained throughout 2022, as evidenced by the manufacturing PMI for the non-oil sector reaching 56.6 in October.
As countries prioritize diversifying their economies, the Middle East has offered a high demand for stainless steel, with producers in the region having excellent prospects in the UAE and Saudi Arabia, among other countries, as well as some promising economic opportunities in a few African countries. Market conditions certainly changed from August 2022 onwards and stainless steel producers have reduced their outputs in response to low demand. Despite this volatility, companies across the supply chain will report solid financial results.
Although there was this slowdown in activity during the second half of 2022, many global market participants are cautiously optimistic about prospects for 2023. Owing to geopolitical and economic challenges, however, most analysts believe the sector will remain vulnerable.
Distributors and service centres were expected to continue destocking into the new year and this is likely to lead to sluggish purchasing conditions in the months ahead.
Overall, stainless steel prices are still higher than they were prior to the pandemic.