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UAE rebar mills asked to ramp up production to counter talks of insufficient supply

Steel News - Published on Fri, 21 Apr 2017

Image Source: Alamy
Gulf News reported that all steel rebar mills in the UAE have been asked to ramp up production and thus counter any talk of a lack of supply, according to an industry source. Current demand for steel in the UAE is estimated at 3.6 million tonnes annually, and could see a significant spike in demand as the construction sector starts on mega projects. Mr Bharat Bhatia of Conares and a member of the local steelmakers’ grouping Magnet said that “We are hearing the trade talk about insufficient supply from domestic manufacturers. Domestic manufacturers need to counter such motivated talk, which is being done to make a case for suppliers to import steel, primarily from Turkey.”

As per Magnet’s estimates, the biggest rebar manufacturers, including Emirates Steel Industries, are running their production at optimum capacity. If all members push theirs to optimum capacity, the need of the local markets can be met easily, according to Bhatia.

UAE producers have in recent years been fighting a battle of supremacy with importers of cheaper steel from overseas. Recently, the ministry stepped in and removed some of the duty benefits local traders used to have. Magnet had also been calling on the ministry to raise the import duties further, but the ministry is yet to take a call on that. But it has stipulated that in all major domestic contracts, local steel mills should be given preferential treatment in tenders. Based on conservative estimates, demand could see a 10 per cent gain this year. Prices by and large have not been volatile.

Mr Bhatia said that “With all these favourable factors, local manufacturers fail to see why traders have to make a commotion about inadequate supplies. It’s factually incorrect. UAE steel mills have an installed capacity of 5 million tonnes annually, and if we strike optimum production, the whole of the local requirements can be met easily. If we need sudden additional supply, there are the Omani mills that can deliver just as easily. There is no need to source from Turkey or anywhere else. The quality steel is available right here.”

But producers need to walk a fine line with utilizing capacities. Sudden increases in supply could leave a big dent on prices if stocks build up. And then it can turn into a bitter price based battle of attrition to liquidate stocks.

According to Omar Al Mashour, General Manager of Abu Dhabi based Union Iron & Steel Company, we are now receiving sufficient support from the Government to protect the local steel manufacturing sector. We are optimistic for the next couple of years with the projects in Dubai, and Abu Dhabi is following the path with mega projects and major infrastructures. Our current annual production capacity is 320,000 tonnes.

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Posted By : Rabi Wangkhem on Fri, 21 Apr 2017
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