A surge in the imports of steel bars in the UAE has hurt local manufacturing firms, eroding their share in the domestic markets, the top names in the industry say.
Steel producers have complained that there is a growing trend of rebar imports in the country from non-GCC countries despite the strict implementation of customs duty of five per cent on imports of steel rebar and wire rod.
The UAE is the most targeted market within the region as its imports of steel rebar are significantly higher than other GCC countries’.
Bharat Bhatia, CEO of Conares, while speaking at the first meeting of ‘Magnet’, a platform to promote domestic steel production and redress concerns in the industry, held in Dubai on August 29, said the initiatives of the Ministry of Economy (MoE), such as establishing the Industrial Coordination Council and imposing custom duty on imports, have been “helping the local steel producers to offer their products with the best quality and on competitive prices.”
“However, the rebar imports continue to create an imbalance to operate heavy industries, impacting economy of the region. The UAE has a combined capacity to produce five million tons of steel rebars annually, which is more than sufficient to meet current demands of the country needing 3.5 to four million tons annually,” Bhatia added.
According to him, using local products is the way forward, since it spreads positive sentiments across. “For example, steel is a key construction commodity. If all stakeholders in the construction industry promote using local rebars, it will endorse national industries which add to the country’s GDP and also create more job opportunities,” he said.
Mohammed Salem Al Afari, Vice-President Marketing at Emirates Steel Industry, a subsidiary of Senaat, said, “All steel manufacturers in the UAE are facing the challenge with the inflow of cheap steel in the local market imported from Turkey, albeit the domestic steel mills have sufficient capacity to support the new wave of infrastructure developments planned up to 2020. If the traders only consider buying from local producers, the prices can be maintained competitively.”
“If we compare prices of finished rebar product and raw product, the price gap is shrinking as it causes increase in production cost while diminishing the profit margin. This is in addition to the selling prices of rebar coming under pressure when the traders import cheap products predominantly from Turkey.” he added.
Dr. Ramzi Al Halasa, Advisor & Board Director of Sharjah-based Hamriyah Steel, called for the government’s attention to the mounting concerns in the UAE steel market.
“The announcement of major landmark projects across the country had signaled a boom in the steel industry, and the capacity and technologies to cater to this requirement are in place operational. But this positive indication is currently hindered by the flood of cheap steel in the local market imported from countries like Turkey and China.”
However, Omar Al Mashhour, General Manager, Union Iron & Steel Company in Abu Dhabi, is hopeful of the domestic market and he foresees a good demand in the next couple of years for the local products from the ongoing projects in the UAE, especially the projects related to infrastructure development to host the World Expo 2020 in Dubai, and the FIFA World Cup 2022 in Qatar.
The UAE’s Council of Ministers has recently taken several decisions upon recommendation of the MoE with the view to encourage using ‘Made in UAE’ products.
A ministry representative stressed that the Council of Ministers’ decision no 85/4w/2 of 2015 issued the common rules for giving a price preference of 10 per cent in governmental procurements to domestic products as compared to foreign products.
“Additionally, in relation to the steel sector, the Council issued its decision no 24/2t/2 of 2016 with the main objective to discourage consultancy offices from requiring the use of foreign steel when preparing the tender documentation for construction projects,” he said.
“It is also very important to recall the Council of Ministers decision no 55/4w/3 of 2016 establishing the Industrial Coordination Council in the UAE which will work in close partnership with all industries to hear their concerns and translate them into plans and strategies to promote the country’s industrial sectors under the directives of the UAE top leadership,” he remarked.