Sajiv Kumar D.: Slow pace of development in UAE steel industry will benefit from World Expo

Asian Metal: Mr Kumar, thanks for agreeing to the interview with Asian Metal. Could you please give us a detailed introduction to your company?

Sajiv: OK. Elegant Steel & Commodities L.L.C is part of the Elegant Steel Group with offices in Dubai, Sharjah and Korea. It is an international trading company with associates worldwide. We have strong sourcing from Korea, China, Turkey, India etc., and we deal in flat steel products (like CRC and HRC), long steel products (like wire rods and D-Bars), and steel raw materials (like HMS). We’re hoping to enter the project market and provide full support to realty developers and foreign construction companies in the GCC region, using our worldwide sourcing. We’ll be doing back-to-back trading using the CMA warehouses and facilities when the need to hold stock arises.

Asian Metal: As we know, UAE is an importing country for steel products. Which countries are sources of the material?

Sajiv: Sources for the steel coming into the UAE include China, India, Japan, South Korea, Saudi Arabia, South Africa, Europe, Turkey and Qatar. China is our biggest supplier at the moment due to the lower prices and high quality of its materials. We have cooperated with WISCO, Ansteel, Benxi Steel and Laiwu Steel previously, but sometimes we prefer to cooperate with traders because they can provide a more thorough and better service than steel mills.

Asian Metal: Does your country consume imported steel products or export to other countries? If the UAE is a transfer station, which countries are your major target markets?

Sajiv: Yes, actually the UAE is a net importer of flat products. UAE consumes imported steel products and also exports the imported steel to the GCC, African markets and other neighboring countries. In these countries, there are no big steel mills producing high quality materials due to a lack of techniques and relevant equipment. In addition, most of them are developing countries at the moment.

Asian Metal: Could you make a comparison between H1 of this year and previous years on the flat steel market in UAE?

Sajiv: The steel market last year was better than it has been this year. Even though our trading volume has being increasing since the beginning of 2014, the average sales price of steel products this year is around USD50-60/mt lower than last year. The business is out there but sometimes there is neither a loss nor any profit. If the quantity is 20k MT per order, we cannot charge more than USD1/mt or USD2/mt. I think the main reason for the reduced profits is the unreleased demand from downstream consumers. The problem of supply exceeding demand exists all over the world at the moment.

Asian Metal: What are your thoughts on the steel market in H2 of this year?

Sajiv: In H2 of this year we will face price pressure from buyers, due to a drop in the price of steel from China. Indian prices will also find it hard to move upwards and Iranian prices for HRC are at a very low level. Global steel prices are under pressure due to falling raw material prices. As a consequence, it is hard for steel mills to lift the ex-works prices of finished steel products. I think that it will be very tough for steel mills to secure profits this year if they have no new marketing strategies besides keeping existing customers or exploring new customers. Because there are no signs of a market recovery from downstream or upstream industries in the short term, prices for finished steel products aren’t likely go up in the traditional peak season, September and October.

Asian Metal: The World Expo will be held in Dubai in 2020. What positive effects will it bring to the steel market?

Sajiv: Around the end of 2016 and beginning of 2017, we expect to see a boom in the construction industry while the infrastructure required for establishing the exhibition centre and related projects is developed. Many new buildings will have to be constructed, which will need more and more steel products and other construction materials. In addition, there will be plenty of newcomers investing in Dubai. We also expect to see the job market pick up, stimulating the economic development of UAE and the GCC countries in general.