UAE steel wants help from government

Despite higher import duties, cheap Turkish and Chinese imports hitting local industry

With Chinese and Turkish steel products still flooding the market, UAE manufacturers might still need additional support from the government, say industry sources.

In particular, the devaluation of the Turkish lira against the dollar — by as much as 22 per cent in the recent past — is giving local importers of Turkish steel competitive advantages that local producers find difficult to match, the sources add.

This is despite the removal of the 5 per cent duty waiver on such imports in 2015 that local traders used to enjoy. “But the lira’s weakness has set aside the impact from the 5 per cent duty imposition,” said Bharat Bhatia, CEO of Conares, which operates two steel plants in Dubai. (Until 2015, traders could ship at zero import duties provided they did some value-addition. But the norm was that very little value-adds actually took place and the traders would just dump them into the local market at whatever price was available.)

The Ministry of Economy has been putting in its best efforts to ensure a level playing field for domestic producers. Last year, it issued directives to the construction industry to give preferences to “Made in UAE” steel in their projects. And if they did not do so, issue justifications as to why they sourced from elsewhere.

There could be further regulatory measures — a draft anti-dumping duty that could conceivably cover a range of commodities is awaiting the final sign-off, Bhatia said.

“But the local industry needs further protection — all local steel makers have requested the Ministry of Economy to consider imposing a ‘safeguard duty’ of 10-15 per cent on top of the 5 per cent import rate,” said Bhatia. “We have provided all the details related to how cheap Turkish imports are affecting local producers.

“We have said this before — every country with sizeable domestic steel production have in place protection of one sort or the other, including the US and India. There is a lot of supply coming from even the other Gulf states into the UAE — that’s not something UAE producers are concerned about.

“If the UAE imposes tougher duties on non-GCC imports, it could even prompt other GCC states to do the same. For domestic economies, it’s the best way forward.”

Even Chinese-made steel imports are starting to cause problems, particularly with steel pipes and tubes. “These Chinese imports are being sold at Dh150-Dh200 a tonne cheaper than domestic made ones, even though they are inferior in quality.

“The matter has been raised with the Ministry, and it’s for UAE manufacturers to provide evidence of the scale of the problem. It’s going to be a long process.” In terms of local demand for steel, Bhatia reckons that 2017 will maintain the momentum that was there last year.

Abdullah Al Fin Al Shamsi, Assistant Undersecretary Industrial Affairs at the UAE Ministry of Economy, said: “GCC countries continue studying the options to raise the tariffs on imported steel, aimed at helping protect local steel producers from cheap imports. We have traditionally kept steel tariffs low to facilitate local building booms. There are lot of measures in plan to control dumping of cheaper steal products from some countries, as this puts local steel producers at a tremendous disadvantage. It is not in the main agenda for the UAE to approach the World Trade Organisation (WTO) for imposing anti-dumping charges levied on steel pipes. It’s just one of the options, as there are certain mechanisms to be in place before going to the WTO.”