Dubai: Emirates Steel, UAE’s largest steelmaker, said it would be focusing on manufacturing high margin, high strength Value Added Products (VAPs) as the demand for quality steel picks up in the Middle East region and across the globe.
The company quoting an Ernst and Young report said that global demand for steel to grow faster this year at 3.3 per cent with more demand growth expected outside China including India, Brazil, Russia and emerging markets in the Middle East and North Africa.
VAPs are mainly finished steel and the products vary from sheet piles to high silica wire rod to long steel bars to alloy steel.
“We have been closely observing the benefits large steel producers in the world are reaping by progressively moving into value-added products and we are hopeful that by adopting this model we will continue to protect our bottom line amid the current challenging industry circumstances,” said Emirates Steel’s CEO Saeed G Al Romaithi in a press release.
The company said that Middle East region imports most of its high value added steel and it wants to capitalise the demand by manufacturing these products domestically.
Demand for structural steel in the GCC region is expected to reach 2.65 million tons by 2018 compared to 3.85 million tons for the entire Middle East, according to Emirates Steel estimates.
Al Romaithi said that the market is moving from commodity-grade steel to high-grade steel, which provides higher margins. “To remain competitive domestically and in our export markets, we need to grow the share of value added and sophisticated steel products in our export basket,” he added.
The company recently started developing steel for building offshore oil rigs, which was earlier being imported, the press release said. It also joined hands in a strategic collaboration with the UAE’s Emirates Nuclear Energy Corporation for the supply of high-value steel products for nuclear plants.
Emirates Steel is owned by Senaat, the UAE’s largest industrial conglomerate and a driving force for implementing the Abu Dhabi government’s industrial diversification policy. It is the only integrated steel plant in the UAE, utilising the latest rolling mill technology to produce rebar, wire rod and heavy sections.
In 2012, the Company began producing at a capacity of 3.5 million tonnes per annum, following two expansions and the investment of around Dh11 billion. The company’s revenues in 2013 increased to Dh6.5 billion, almost eight per cent higher than in 2012.
