DUBAI  - Emirates Steel, the largest steel producer in the United Arab Emirates (UAE), expects steel demand in the Arab world to start recovering next year after a difficult 2019.

The state-owned company expects demand to rise by 1.2% to 50 million tonnes in 2020, compared with a 2.6% decline this year amid a regional construction slowdown.

"This year is going to be difficult," Chief Executive Saeed al-Remeithi told Reuters in Dubai.

Gulf government spending has tightened in recent years, delaying some projects as economies slowed in the face of lower oil prices and weaker global growth.

Emirates Steel, owned by Abu Dhabi state investor Senaat, hopes that large government-backed projects in Saudi Arabia and the UAE will boost demand, he said, pointing to the likes of expansion plans for Dubai's second airport.

Iron ore prices have surged above $100 this year as China's consumption outpaces expectations and after supply disruptions at Brazil's Vale, the world’s largest iron ore miner.

Remeithi said he believed the rise in iron ore prices was temporary, though the company is seeking to reduce its cost base without laying off staff.

"It's a very difficult time but I think the company has a strong base for it to survive and meet the expectations of shareholders," he said.

(Reporting by Alexander Cornwell Editing by David Goodman) ((Alexander.Cornwell@thomsonreuters.com;))