UAE-based rebar rolling company Hamriyah Steel is expected to face certain operational difficulties in the medium term since it has been included in the list of the most recent US sanctions. On April 12, the Office of Foreign Assets Control of the US Treasury Department (OFAC), in coordination with the UK, announced the introduction of new sanctions against the facilitation network of Alisher Usmanov. In addition to sanctioning Metalloinvest, the United States has also penalized a reportedly former subsidiary of Metalloinvest in the UAE, Hamriyah Steel.
Hamriyah Steel has a nominal capacity of 1 million mt rebar rolling per year with a monthly supply of around 80,000 mt. The company does not have its own billet production and, while previously sourcing semis from Russia, in recent years it has been focusing on more advantageous billet of GCC origins. Sources expect that due to the sanctions the company will first of all face certain financial issues.
“All of the UAE banks are tied to international credits, so their [Hamriya’s] accounts will be closed,” a source said. “Banks will not work with them and how they will work without the banks I do not understand,” a UAE-based producer told SteelOrbis. “I think, if they really want to, they can find a way to bypass them. But the question is whether it is needed. It will be cheaper to stop and wait,” he added.
Another important issue is that, according to sources, Hamriya imports spare parts and some materials for the rolling mill as well as equipment, and the suppliers of these are expected to be hesitant to deal with them from now on, fearing secondary sanctions. Insurance companies are also concerned, similar to the situation experienced with other already sanctioned Russian steel producers.
Billet sourcing may also be a problem, sources believe. In theory, Hamriyah can still source semis from Metalloinvest, but, taking into account the logistics, the price will be much higher compared to the delivered prices from Iran, thus putting the re-roller’s competitiveness under significant pressure.
While many sources are aiming to evaluate the situation, some of them expect Hamriyah to decrease or even stop production in around three or four months unless a solution is found. In the meantime, most Emirati players believe that, even in the case of a production stoppage, the rebar market in the UAE is not likely to face any supply shortage.
“They were supplying around 20,000 mt of rebar per month in the UAE and this volume will be eagerly and easily replaced by other re-rollers here as well as by Oman,” a local producer said.
Some UAE market sources estimate the average monthly domestic rebar consumption at around 185,000 mt in the first quarter, while in April and May it is expected at 170,000-180,000 mt.