The authorities in Dubai have decided to cut spending among other restrictions being applied due to lower incoming state revenues as a result of the impact of Covid-19 on economic activities. The measures concern construction activities in addition to other sectors and are expected to impact steel demand in the emirate in the mid-term.
As the economy of Dubai, which is heavily dependent on tourism, trade and retail activities, is being severely hit by Covid-19, the local authorities have been seeking ways to cut expenditure. The Department of Finance has ordered a 50 percent reduction on capital spending and also a delay of new governmentally-supported construction projects, according to the local media. In addition, the spending on ongoing construction projects will be reduced as well by “ensuring no cost overruns and conducting value engineering for all projects.” In addition, the delay of Dubai Expo 2020 will be discussed this month, SteelOrbis understands.
Steel business activities in the UAE have been heavily impacted by the introduced lockdowns and logistical restrictions, causing some producers to suspend or to slow down operations. Spending cuts in the construction sector are of great concern for local steel market players as the restrictions will certainly result in lower consumption rates in the emirate. “We are slowing down ongoing construction projects and have some delays and will not have sizable new ones, so it seems. I’m afraid this is only the beginning and it will get worse,” a producer told SteelOrbis. Some regional players are worried that the UAE’s monthly steel consumption rate might fall below 100,000 mt per month, while earlier it was estimated at around 200,000-250,000 mt.