During recent weeks, as was mentioned previously by SteelOrbis, longs producers in the UAE have been suffering from the almost complete halt of shipments to Saudi Arabia due to the newly imposed trade restriction. The situation has resulted in oversupply in the local market since rebar consumption in neighboring countries is not strong enough to absorb the excessive tonnages which are estimated at 40,000-50,000 mt per month. At the same time, demand in the UAE has been reduced due to seasonal factors, which has created additional problems for local mills. However, the newly announced construction regulation in certain areas of the country may help stimulate producers’ domestic sales.
According to the market sources, the authorities in the Abu Dhabi emirate and the local city of Al Ain have issued similar decrees, stating that from now on in the mentioned areas contractors are to use only “Emirates steel in all projects.” It is stated that the projects which will seek to avoid the regulation will not obtain construction approvals. However, most of the market players surveyed by SteelOrbis interpret the regulation as obliging the use of UAE origin rebar and, since the current wording is too similar to the name of Emirates Steel Industries, the largest local producer, they believe the wording will be amended soon.
If that is the case, the regulation may help local mills to strengthen their sales domestically but will undermine the presence of Omani mills in the mentioned regions. Still, market players mainly believe the effect will not be so strong. “This decree pertains only to the government projects in Abu Dhabi and Al Ain and that is only about 25 percent of the total UAE market. And in most cases, they were buying only Emirati-origin steel. So the impact I think will be small,” a large local trader told SteelOrbis.