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Moving Toward the Integration of the Iron and Steel Business in Japan and the Middle East

July 2010

Rapid growth of the UAE represented by the construction of the highest skyscraper in the world and other developments

It is said that any increase in iron demand serves as a barometer of future growth, since it is used in a wide range of industries, including infrastructure, construction, housing, automobiles, electrical appliances, etc. The United Arab Emirates is one nation experiencing rapid growth in iron demand.

Dubai, the second largest emirate among the seven emirates of the UAE, boasts a land area of 83,600 square kilometers (about a quarter of the size of Japan) and is located on the Persian Gulf coast. Its population has seen huge growth since the establishment of the Free Zone (Free Trade Zone) in 1981, which attracted a rush of foreign businesses keen to take advantage of the preferential taxation system and other favorable polices, thereby accelerating demand for housing. Numerous construction projects, including the Dubai Khalifa Tower, the world's highest skyscraper at 828 meters; the Palm Islands, man-made resort islands; various commercial facilities; and public buildings, have also spurred tremendous growth.

This rapid economic development has led to a steady increase in steel consumption in the UAE, from less than 2 million tons in the 1990s to almost 9 million tons in 2007. Though some projects were delayed or stopped in the wake of the global recession in 2008, the economy has now largely stabilized.

Sumitomo Corporation established Summit Steel Middle East (SSME) FZCO, a local operating company, in November 2005, to meet the demands of Dubai and other Middle Eastern nations, through a coil center business that covers procurement of iron and steel products to processing and sales of steel sheets, etc. as well as the trading business that deals with flat steel*1, shaped steel*2, steel pipes, etc.

A building cluster in the newly developed urban area of Dubai, facing the longest expressway in UAE, the Sheikh Zayed Road.

  • *1Flat steel generally refers to processed metal sheets with a thickness of six millimeters or less. It is widely used for automobiles, electrical appliances, general construction materials, beverage cans, etc.
  • *2Shaped steel refers to steel pieces with a certain cross-sectional shape such as an "H" or "I." It is mainly used for civil engineering and construction pillars. Shaped steel with a circular hollow section is referred to as steel piping.

Providing services ahead of other Japanese companies

SSME originally started out as a trader of iron and steel products. At that time, however, most manufacturing bases were located in Europe, Japan and other Asian countries and therefore it took almost four months from order to delivery. To improve this situation, SSME launched its coil center in the UAE in April 2007, based on a core business model that our Metal Products Business Unit is implementing worldwide.

The coil center stocks steel sheet coils for cutting and processing according to customer orders. It enables just-in-time delivery of customized products at any time and in any volume.

Not many Japanese manufacturing plants have started operation in the Middle East. Through its coil center and its trade in iron and steel products, Sumitomo Corporation has laid a foundation in the Middle East ahead of other Japanese companies.

Coil center under construction, 2006. Located in the midst of the vast desert, infrastructure was developed at the same time.

Utilizing Sumitomo Corporation's core strengths in a growing economy

Initial efforts always come with challenges. SSME is no exception. The biggest challenge we faced when starting out was how we could communicate to customers the advantage of the coil center. Reflecting the difficulty of securing a stable steel material supply in the Middle East due to trade practices and geographical reasons, companies in Dubai usually hold a large amount of inventory in anticipation of future demand.

While many companies have been hindered by this different business style, SSME was confident Dubai firms would understand the merits of the just-in-time supply system. Sumitomo's confidence was underpinned by its successful experience of setting up coil centers in Asian countries, where it managed to establish a new business model by cultivating deep understanding among customers through persistent promotion.

The Dubai coil center. As even small amounts of dust can affect the quality of processed products, various efforts are taken to avoid this situation, by, for example, using clear acrylic board to cover machinery.

Utilizing Sumitomo Corporation's network and past achievements, SSME streamlined its business procedures from equipment installation, service operation to control system, and persistently communicated the benefits of the coil center.

Instead of simply imposing its own business style, by focusing on integrating Dubai's business practices and ideas and by combining the advantages of both business systems, SSME has developed a new business model tailored to the Middle East and worked to expand its business.

Processed and wrapped steel sheets before shipment. With an annual processing capability of 60,000 tons, high priority is placed on safety.

Business in Southwest Asia and North Africa

Utilizing its experience in coil center operation and trading, SSME plans to expand its business in the Middle Eastern Gulf nations, eastern Arab countries and North African countries, where significant economic growth is anticipated. It is anticipated that this will provide customers with even greater access to the Middle Eastern market via SSME.

Utilizing its past experiences and significant expertise, SSME will contribute to the development of societies all over the world, responding to their respective needs.

SSME employees in Dubai service the entire Middle Eastern region.

Related Tag

  • Metal Products Business Unit
  • UAE
  • Metal Products

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