Al Ghurair Iron and Steel, a joint venture between Nippon Steel Sumitomo Metal Corporation of Japan and UAE’s Al Ghurair Group, expects steel exports to the US will be hit due to the introduction of tariffs on imported steel and aluminium by the US government, the chief executive officer of the firm told Gulf News in an interview.
“We are still getting enquiries from our US customers, however pricing has become a challenge. Even after the tariffs were announced, the buyers in the US have continued to send us enquires but they expect the prices to be discounted to offset the impact of the new 25 per cent tariffs,” said Abu Baqer Hussain, adding that US is a net importer of steel and their domestic mills don’t cater to the entire demand of the metal in the country.
He said that the market sentiment is down due to protectionist measures undertaken by the US government and customers are feeling the heat.
“The market sentiment is not positive and a bit down. We have raised the issue with the ministry of economy and industry in the UAE and it is up to them to take up this issue and get us some relief.”
US President Donald Trump announced the imposition of tariffs on imported steel and aluminium recently. Steel products will face a 25 per cent tariff, with a 10 per cent tariff being slapped on aluminium goods.
Al Ghurair Iron and Steel exports 90,000 tonnes per annum of steel to the US representing around 20 per cent of their total production of half a million tonnes per annum. It is also exporting to other countries including in the Middle East, North Africa and Europe.
Hussain also said there has been a good demand in the UAE and in Saudi Arabia for steel products as economies pick up due to rise in oil prices.
“Demand is good both in the UAE and Saudi. We are not selling anything in Qatar and sales have come to a standstill since the problem. If that situation is resolved demand could be much better.”
“We have started exporting to Europe because of US tariffs but the high freight rates and euro dollar exchange rate is not helping us, so I don’t see consistent sales in Europe. This is why getting an exemption for the US tariff is important to us.”
The Abu Dhabi-based firm has been running to full production capacity and profits will depend on the market situation and raw material prices, he said.
“So far the year has been challenging, yet good and we have to wait and watch how the rest of the year turns out.”
Al Ghurair Iron and Steel, set up in 2009, is a joint venture between Al Ghurair Group (80 per cent) and Japanese firm Nippon Steel Sumitomo Metal Corporation (20 per cent).
The company based in Musaffah, manufactures flat steel products like steel sheets, coils and slits used in the construction industry and has a workforce of more than 550 people.
On the financing front, HSBC has been a lead bank and the company is diversifying and bringing in other banks on board including Dubai Islamic Bank for working capital financing.
“We also have some traders and other intermediaries who are willing to extend working capital finances. On the equity front, we have Al Ghurair Group and Nippon Steel Sumitomo Metal Corporation.”
Source: Gulf News