Emirates Steel: Export outlook depends on Trump's trade policies rather than on China

Friday, 08 June 2018 11:47:06 (GMT+3)   |   Istanbul
       

Could you inform us about Emirates Steel’s transformation from a re-roller of imported billets to an integrated steelmaker within such a short time?

That is indeed an amazing story. In 2005, we were simply rolling billets: we had one rolling mill and produced some 500,000 metric tons of rebar. Six years later, in 2011, we had become an integrated steel producer with five rolling mills and a capacity of 2 million metric tons of rebar and 500,000 metric tons of wire rod.

Could you tell us about your current capacity and product range?

Emirates Steel produces long products including rebar, wire rod, heavy sections and sheet piles, with a consolidated capacity of around 3.5 million metric tons.

Do you have plans to increase your production and diversify your product range?

We are always open for opportunities to serve market needs, especially in flat products. But, in the short term and in order to mitigate risks in the commodity sector, we do seek to diversify: for instance, through developing value-added products, in particular in our wire rod and sections capabilities.

You recently commissioned a new scrap shredding facility. Do you expect this investment will help you reduce your costs?

The reason behind the shredder has three layers.

Of course, back in 2015 and 2016, when steelmakers were suffering on a global level, adding scrap to our DRI feed came as a cost-saving element. And with the availability of light scrap, it was an opportunity for Emirates Steel to have its own processing facilities.

In doing this, we have gained experience in adapting our feed-mix to fluctuations in the market, i.e., we enhanced our flexibility.

Finally, with today’s drive to sustainability, adding scrap to our melting process is in line with our government’s pledge for future sustainable development.

What can you say about demand in your domestic and export markets?

Demand for rebar in the UAE remains very healthy. The main driver is of course EXPO 2020.

Section demand in the GCC was below expectations over the past few years, due to lower oil prices and a slowdown in projects for major sectors such as oil, gas, power and water.

In the meantime, we have grown in the export markets for sections and have been able to compensate for the weakening local demand.

How do you evaluate 2018 so far and what is your expectation for the rest of the year?

As already stated, rebar demand in the UAE continues to be very healthy.

With oil prices recovering, we see project activity picking up, in particular in the GCC region.

We expect 2018 to continue at this pace.

With Chinese exports still declining, do you see any changes, or improvements, in your exports?

When we say ‘exports’, we mainly mean sections and wire rod. Yes, our exports have grown significantly. Whether we see this continue will not depend so much on China’s domestic needs, but rather on President Trump’s stance on trade and the global reaction to that.

Considering the Section 232 duties and the safeguard investigations launched by the EU and Turkey, what is your view on rising protectionism and how do you think it will affect your business? How do you expect trade flows to change?

That is a good question. For now, we do not know how events and global trade will actually play out.

However, we do notice specific protection measures coming into force in the GCC region for the first time ever, which is a significant indication that the GCC authorities are ready to act to protect the local steel industry against unfair competition when needed.

For our part, we have always welcomed fair competition and an open market policy.


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