Mr. Sanjay Mehta, Chief Executive Officer of Al Nasser Industrial Enterprises LLC, the biggest trading company in the UAE, evaluated the current situation in the UAE rebar market for SteelOrbis.
What can you tell us about the current situation of construction sector in the UAE?
Although construction sector in the UAE has slowed down and 2012 was indeed a poor year, I am happy to see that this year has started with some signs of revival. Regarding the situation and conditions of the local rebar producers in the UAE, I can say that if you if you exclude ESI (Emirates Steel Industries) then all other rebar producers are between a rock and a hard place i.e. ESI & Turkish mills.
On demand side, for rebar and other long steel products in the UAE, all is sluggish and demand levels have been fluctuating recently. We hope there will be five to ten percent jump in consumption in 2013 on yearly basis. Domestic rebar production in the UAE is more than demand and this is also an obstacle.
Market players in the long steel products have experienced price margin problems for a long time. What do you see profit margin issues currently and should we expect some protectionist measures regarding long steel product imports in the UAE in the future?
Margins continue to be "thin or none" unless one is an integrated producer like Emirates Steel Industries, for which margins can only be a single digit percentage.
We do not expect any protectionist measures in a foreseeable future and we would like the government not to implement any such measures as well.
What do you think about the latest news regarding cutters and benders? The UAE Ministry of Economy officially denied speculations that the exemption allowing cutters end benders in the country to import steel without paying the five percent import duty has been cancelled, but said that they will tighten measures to avoid any violation.
I observe some cutter and benders are violating rules to obtain the duty exemption, as per GCC Customs Union rules. They are ‘processing centers', not "manufacturing industries". At the end of the day, I think everybody should follow the rules.
