The United Arab Emirates (UAE) has been witnessing a speedy recovery in economic activities post COVID-19 which will result in increase in domestic steel consumption as the property sector is expected to stay bullish in the coming years.
As per the local media, Azizi Developments, a real estate company, is planning to spend over Dh3.5bn ($0.95bn) in the next 2-3 years to construct 45 buildings across Dubai. These projects include 11,000 homes in MBR city, Dubai Healthcare City and Al Furjan.
Stable property prices encourage new investments – Despite being hit by COVID-19 pandemic, the property prices in Dubai remained stable in the first half of 2020. Real estate prices, though, lowered by minor margins despite sharp drop in steel prices during the pandemic period. This has encouraged more investment in new infra projects which will drive steel demand in the coming days.
Stimulus from government – The Dubai government announced a new stimulus package worth Dh1.5bn to help the economy cope with the effects of the COVID-19 outbreak mid-July. This has supported domestic steelmakers to ramp up their production volumes this year.
High ferrous scrap consumption – Emirates steel, a Abu Dhabi-based integrated steel manufacturer, has announced that it’ll focus more on purchasing local scrap as feed stock in its production process. In 2019, Emirates Steel used 280,000 mt of scrap material, however, it could more than double this year.
Ferrous scrap exports to plunge on four months ban – The UAE is Asia’s second largest scrap exporter after Japan. UAE’s top scrap importing partners in 2019 were India with 31pc, Pakistan 25pc, and Oman with 11pc. UAE supplies around 1.5mn mt to 1.7mn mt ferrous scrap per year. However, a scrap export ban was announced in early May for four months ending mid-September. All major scrap grades, falling under HS codes 720410, 720429, 720430, 720441, 720449, 720450 for ferrous scrap and 720421 for stainless scrap are banned for exports.
The UAE government said the restrictions on scrap exports will ensure domestic steelmakers have enough supply amid COVID-19 related uncertainties in steelmaking operations.