February 26, 2019 / 10:30 AM / 3 months ago

UPDATE 1-Emirates Steel expects 2019 slowdown in regional construction

(Adds comments from CEO)

By Stanley Carvalho

ABU DHABI, Feb 26 (Reuters) - 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 percent 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 percent of the company’s exports head to the United States, which has imposed a heavy tariff of 25 percent 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 percent 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 7.5 billion dirhams ($2.04 billion) in 2018, up 15 percent from a year earlier.

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

($1 = 3.6728 UAE dirham)

Reporting by Stanley Carvalho Editing by Edmund Blair

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