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Abu Dhabi, UAEMonday 18 June 2018

Any US tariffs will have limited impact on Emirates Steel's exports

The UAE's top steel producer is ready for an IPO which is subject to shareholders' decision, CEO says 

US President Donald Trump’s plans to impose steep tariffs on steel and aluminium imports will have a limited impact on Emirates Steel, the UAE's top steel producer which ships 5 per cent of its total exports to America, its chief executive said.

“That’s a market for us and [if] something happens there, there will be [an] effect on us,” Saeed Al Remeithi told a media briefing at the company’s headquarter in Abu Dhabi. “But it’s not that big of [an] effect because we have other lea-ways and we have opened other markets. The beauty here is that…we have so many other markets in which we can operate,” he said, adding the company currently exports to 40 markets across the globe.

Despite opposition from within his administration, Mr Trump announced plans last week to slap a 25 per cent duty on imported steel and 10 per cent on aluminium. His plan has fanned fears of a global trade war, drawing stiff criticism from US trading partners across the globe. The European Union and China have said they will protect their interests and may impose retaliatory taxes on US products. The IMF said the planned import restrictions are likely to cause damage not only outside the US, but also to the US economy itself, including to its manufacturing and construction sectors.

The warnings have not dissuaded US President, who on Friday tweeted “trade wars are good and easy to win." World Trade Organization director-general Roberto Azevedo, however, said “a trade war is in no one’s interests,” while Li Xinchuang, the vice-chairman of China Iron and Steel Association, called it “an extremely stupid move”.

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Emirates Steel, which is a subsidiary of Abu Dhabi government-controlled conglomerate Senaat, also announced on Monday its 2017 financial and operational results and said it is ready for an initial public offering if its shareholders opt to do so, Mr Al Remeithi said

“Our job here is to make sure that company is ready for this [IPO]. I’ll leave the decision [of potential listing] to the government of Abu Dhabi,” he said.” “We are running the company as a private company since the beginning. If it [the listing] is needed, then we are ready for it. If it will happen, the decision will come from their side,” he said without giving further details.

Two subsidiaries of Senaat, a holding company which manages assets worth Dh27.4bn for the government of Abu Dhabi, are already listed. Both Agthia, a food and beverages manufacturer and Arkan which operates in the building materials sector, trade on Abu Dhabi Securities Exchange.

Public offerings are making a comeback following a dry spell over the past couple of years, as a three-year oil slump and slower economic growth forced companies to shelve or put on hold plans to raise funds through share sales amid concerns. UAE bourses saw Emaar Development and the Adnoc Distribution listings in the most recent quarter. The deals raised a combined $2.2bn, accounting for about 88 per cent of total value of GCC share floats in the period, according to consultancy PwC.

In terms of domestic market performance, Emirates Steel recorded a 22 per cent year-on-year increase in revenues to Dh6.6 billion in 2017. It aims to increase it to Dh7.5bn in 2018.

The company delivered a Ebita margin of 12 per cent amid a challenging year for global steel market and increased production to more than 3.2 million tonnes by the end of the last year, up from 3.1 million tonnes in 2016. The firm, which has 60 per cent share of the domestic market, exports 20 per cent of its production, while the remaining is consumed in the home-market.