Escalation of a trade war between the two biggest economies in the world leads to a reduction in steel demand, both globally and in the regional market, forcing Emirates Steel in the UAE to streamline their costs in order to offset the effects of weaker sales.
This was announced by CEO Saeed al Remeiti in an interview with The National.
According to al-Ramati, Emirates Steel optimizes the cost of “everyday” activities, excluding any reductions to the workforce. “The company focuses more on cost reduction, but this does not mean that we fire people,” he said.
Emirates Steel is one of the largest oil companies in the UAE and one of the portfolio companies of industrial holding Abu Dhabi Senaat.
The steel sector has faced difficulties after the introduction of the 25 per cent duty the U.S. administration under the guidance of Donald trump last year on all imported steel into the country.
Last month, the White house eased restrictions on Mexico and Canada, which are parties to the Agreement on free trade in North America.
According to forecasts by the World Steel Association, in 2019 the global demand for steel will grow by 1.3% and then slowed to 0.9%. In the Association warned that the Outlook is optimistic.
However, Emirates Steel, which planned to increase U.S. sales this year by 5%, is still on track to achieve this goal, said al-Ramati.
The U.S. annually imports about 600,000 tons of steel profiles from the UAE.
About 80% of steel Emirates Steel is consumed domestically, and the company aims to enter new markets such as Latin America to offset slowing global demand.
According to al-Ramati, regional expansion in Iraq and Syria is challenging because of the competition from other key steel producers, such as Turkey and Iran, which are better geographically located to meet the demand.
The volume of steel production at Emirates Steel in 2019 will remain at 3.1 million tons, which corresponds to level of last year.