UAE HDG imports expected to decrease as new plants start up

The United Arab Emirates (UAE) is expected to see its imports of hot-dipped galvanized (HDG) coil decline in 2019 as new production comes on stream.

The UAE produces about 1 million tonnes per year (tpy) of HDG coil, and consumes about 400,000-500,000 tpy of HDG, while imports of HDG into the country are over 400,000 tpy.

The main suppliers of HDG into the UAE are China and India.

UAE-based Dana Steel’s 400,000 tpy HDG plant will start production in the first quarter of 2019 and the country’s HDG imports are expected to decrease as a result.

Currently, the biggest HDG producer in the UAE is Al Ghurair Iron and Steel, with a 400,000 tpy production capacity.

United Iron & Steel also started to produce HDG in January 2018 and had almost reached its full capacity of 250,000 tpy by mid- 2018.

Other HDG producers in the UAE include Asian Ispat, with a capacity of 240,000 tpy and Masoka Steel, which produces 72,000 tpy.

In addition, Conares Steel is planning to start production of 75,000 tpy of pre-painted galvanized coil (PPGI) in January 2019.

The UAE imported 125,000 tonnes of HDG from China and a further 145,000 tonnes from India in 2017.

Corresponding figures for 2016 were 99,000 tonnes of HDG imports from China and 215,000 tonnes from India, according to the International Steel Statistics Bureau (ISSB).

The reason for the decline in Indian exports versus increasing imports from China is that local demand in India is strong and mills do not want to export, a UAE-based trader said.

However, the HDG from China is not approved by authorities in the UAE, so cannot be used for state-supported projects. However, the Indian HDG has the approvals and is used for such projects.

That is the reason why HDG buyers in the UAE pay $50-130 per tonne more for Indian origin HDG.

Offers for 1mm hot-dipped galvanized coil from China were $635-650 per tonne cfr this week, while similar material from India - which has been approved for use by the authorities in the UAE - was on offer at $760-770 per tonne cfr.

Fastmarkets’ weekly price assessment for HDG imports into the UAE was $635-750 per tonne cfr on Tuesday, November 27, falling from $650-760 per tonne cfr.

One trader in the UAE noted that demand for Chinese HDG is also strong in UAE, not only because it is competitively prices but also because supply from China is bigger than that of India.

But imports are expected to decrease in 2019, when new steel mills in UAE start production of HDG, he added.

The UAE currently imposes 5% import duty on HDG but there is no duty for end-users.

The country also exports significant amounts of HDG, with the United States traditionally a major customer.

The US imported 282,408 tonnes of steel from the UAE in 2017, 146,611 tonnes of which was HDG.

However, buying has decreased since a 25% import duty was imposed within Section 232.

The UAE also exports big quantities of HDG to neighbouring countries, mainly the Gulf Co-operation Council (GCC) and Africa.

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