UAE’s Emirates Steel CEO sees challenges in 2019

Emirates Steel, the largest steel producer in the United Arab Emirates, expects a slowdown in regional construction in 2019 and rising iron ore prices, its chief executive said on Tuesday.

Growth in the Gulf economies have slowed due to oil output cuts, lower crude prices and weaker global growth.

Emirates Steel produced 3.1 million tonnes of steel in 2018, matching 2017 volumes. About 20 per cent of production is exported, most of it going to Gulf states.

CEO Saeed al-Remeithi told reporters that he expected 2019 would see “the slowdown of the regional construction sector, surge in iron ore prices, drop in sales prices, market volatility, market protectionism.”

About 3 per cent of the company’s exports head to the United States, which has imposed a heavy tariff of 25 per cent on steel imports. The UAE is seeking exemption from the tariffs on steel and aluminium in talks which are continuing.

Despite the tariff issue, Emirates Steel’s exports were expected to rise to 5 per cent of total exports this year and the company was also looking at new markets in South America, said Mohammed Salem al Afari, sales vice president.

Emirates Steel, owned by Abu Dhabi’s Senaat, a state-owned investor in the emirate’s industrial sector, earned revenues of Dhs7.5bn ($2.04bn) in 2018, up 15 per cent from a year earlier.

The company has no plans to seek financing in the near-term after it refinanced $650m of debt with a new loan and sukuk or Islamic bond late last year, said Stephen Pope, chief financial officer.