Why Emsteel is not worried about rising Chinese imports

• Emsteel expects 10% demand growth
• Chinese steel exports to UAE up 60%
• UAE ‘a fundamental market’ – Emsteel CEO

UAE steel and building material company Emsteel expects demand for its products to grow 10 percent this year, paced by multi-billion-dollar infrastructure projects and real estate developments, its CEO said.

That could offset a challenge from surging imports from China and declining world prices.

The Abu Dhabi-based company has increased production capacity to meet demand from landmark projects, including the $35 billion expansion of Dubai’s Al Maktoum International Airport, a Dubai Metro extension and a newly announced Disney theme park on Abu Dhabi’s Yas Island.

“The UAE remains a fundamental market for us, with exceptional growth,” group CEO Saeed Ghumran Al Remeithi told AGBI. Steel demand in the UAE surged 20 percent last year, he said.

To keep pace Emirates Steel, which is part of the Emsteel Group, has boosted monthly output of reinforced steel rods – or rebars – by more than 50 percent from 260,000 tonnes to 400,000 tonnes, said chief commercial officer Michael Rion. 

Rebar is essential for large-scale concrete construction.

“There’s a tremendous increase in demand for rebar compared to last year,” Rion said. Al Maktoum Airport’s expansion alone is expected to require almost 2 million tonnes, with another 350,000 tonnes needed for the Dubai metro extension, he said.

Emsteel’s relatively bullish outlook is in contrast to global steel markets grappling with comparatively weak European demand, rising exports from China and declining global prices.

Emsteel reported AED2.2 billion ($599 million) of revenue in the first quarter, weathering a 6 percent drop in global steel prices driven by additional Chinese exports, and global economic uncertainty around US tariffs on imports and heightened trade tensions. Still, net income in the three months to March 31 grew only 1 percent AED86 million.

Chinese steel production declined by almost 2 percent last year to just over 1 billion tonnes, its lowest in five years, but exports – including to the UAE (up 60 percent) – rose, according to Rion. That helped to drive global prices down.

Al Remeithi downplayed the competitive challenge from the surge in Chinese imports to the UAE: “There is Chinese material in the market, but people are cautious – they would really prefer a good-quality steel.”

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Uncertainties around global trade remain a wildcard, however. 

In March the US reimposed a 25 percent tariff on all steel imports. Emsteel exports just 2 percent of its product to the US, limiting its direct exposure to US tariffs. 

But other taxes on imports on the US’s two biggest trading partners – Mexico and Canada – could disrupt regional trade flows and divert more steel to the Middle East, Al Remeithi said.

Irrespective, the Gulf’s largest publicly listed steel company is focusing its attention on meeting the growing domestic demand, supported as it is by residential and hospitality developments across the federation, including Ras Al Khaimah.

Emsteel was formed in 2021 through a merger of Emirates Steel Industries and Arkan Building Materials Company. It is the largest steel and building materials company in the UAE by sales and is listed on the Abu Dhabi Securities Exchange.

The company’s share price closed at AED1.20 on Wednesday, down 4 percent in the year to date.