Mathew Ambat: "Billet prices will change direction in coming weeks"

Friday, 22 April 2011 16:58:22 (GMT+2)

We have reached a total production capacity of 700,000 mt, including 500,000 mt of rebar and 200,000 mt of pipe. Our pipe facility was opened in 2005, and our rebar facility has just been commissioned. We have also lately commissioned our galvanizing line.

How do you assess the outlook for the rebar market in the short term, considering also the current demand contraction in the MENA region due to the political turmoil?

In this conference, we see that the general consensus is that in the short term there are some difficulties in the market, since the market has contracted. But in the medium term, the prospects are better. We share the general consensus. We hope that, once the situation stabilizes, all these capacities can be used properly. Our capacity is not that big anyway. We are also looking at other opportunities, not only in the UAE, but also in other GCC markets. Qatar Steel has mentioned that in Qatar there is substantial demand and so they are increasing their capacity. Maybe it is not possible to simply enter that market, but since they will be busy in their own market it opens other opportunities in the region for other producers, like us.

Are you targeting only neighboring countries, or markets further afield also?

We are looking at the markets from a global perspective. From the UAE, you should not only look at the GCC markets, but also to other markets, like the Indian subcontinent and Africa.

What do you think about the long-term effects of the current political situation in the region? Do you think infrastructure spending in the region will increase?

It is very difficult to comment on this issue, mainly because we are not in a country with strong political tensions. However, change can bring many different things, and one of them is infrastructure development, though it is very hard to predict whether infrastructure spending will begin to increase after two months or after two years. Nevertheless, it is certain that because of these changes demand may be stimulated, once a certain level of confidence is reached for actual and potential investors. Fortunately in Dubai, there are no such political tensions.

Have investments in the UAE moved close to saturation level?

In 2008, investment reached a certain point, after which a lot of projects were suspended. But a number of projects have continued, and there are also projects that have never gotten off the ground, due to lack of financing. There are still some ongoing projects of smaller scale in Dubai and the UAE, but of course not at the levels of 2007 and 2008.

Do you think the prosperity of those years will return?

It would be too optimistic to hope that the activity seen in 2008 will return in the near future. However, I think that, if the country continues to develop reasonably, there will always be constant demand.

About your rebar plant, what is your input material?

It is a rolling mill and our input material is billet. We mainly purchase billet supplies from Ukraine and Russia, and also from Turkey.

How do you see the billet market?

In the past months, we have seen that the billet market has been strongly influenced by scrap prices. Besides, everybody is saying that they are adjusting their capacities depending on demand. This is because they do not want to sell excess materials, as they do not wish to sell below their costs. I think this is the trend, and, as long as mills look to maintain their profitability, they will continue to do this because it is logical.

How do you view the short-term outlook of the billet market?

I think, right now, it is a little bit softer than normal, but everybody says that within three to six weeks we will see some changes in the price direction.

Upwards or downwards?

I hope it will follow the direction of finished goods.

And do you think the high-trending oil prices will boost pipe demand?

Yes, it may boost demand, particularly for API grade material. If oil prices keeps rising, it may also increase spending in related development programs.

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