Due to the large infrastructure and property development being undertaken in the UAE, the demand as well as the price of steel has increased tremendously.

UAE steel prices doubled to nearly $540 per ton last year, according to MEsteel.com, a regional B2B steel portal that tracks developments in the steel sector.

One of the leading contractor in the UAE, told Khaleej Times: “The increased demand for steel has also created a major market sector of steel stockists and suppliers who compete to provide the most comprehensive variety of steel on demand."

"There are about 15 players in the local UAE market with three to four top level ones. At present, seven iron and steel factories in the UAE are manufacturing various steel products, which are consumed by local construction industry," he explained.

Industry experts believe that the steel industry, in particular, must now strike a fine balance between short-term profitability and long-term sustainability.

The demand for steel has gone up further due to the post-tsunami rehabilitation work being carried out in the affected region, resurgence in the Far East economies and major economic growth in India.

The UAE produces 50,000 tons of scrap. As a growing economy, the usage of steel and generation of scrap in the country is considerable, according to a leading scrap dealer.

The steel supply sector has expanded with the influx of regional players who have realized the vast potential in UAE. In the present scenario, only those steel traders who can provide quality steel on demand at competitive prices can survive, revealed sources from the industry.

According to a senior official from a reputed steel manufacturing company, the demand and rise in steel prices is also interlinked with huge construction and the activities within the oil and gas industry.

"The region's main economic growth is related to the oil and gas industry and the continuing fluctuations and the sustained rise in the price of crude is accompanied by rising prices in other commodities such as steel," he added.

In the UAE, the construction projects, shipbuilding companies and rising numbers of labour colonies and storage of godowns have ensured a very healthy market for local steel suppliers for the next few years.

On the production side, there is a lot of consolidation by major steel manufacturers who have become much more organized in forecasting market demand. This will control the supply of steel and help create stability in the market, as there are three factories in Jebel Ali, two in Sharjah and one in Musaffah in Abu Dhabi.