Middle Eastern countries boosted their crude steel output in 2017, with producers calling for more trade protection measures to support self-sufficiency in the sector, a report in metalbulletin.com said.

Middle East crude steel output reached 27.17 million tonnes in the first 10 months of the year, up by 13.29 per cent from 23.98 million tonnes for the same period in 2016, according to the statistics by World Steel Association (Worldsteel).

Iran produced 17.90 million tonnes of crude steel over the period, a 20.92 per cent increase; Qatar produced 2.24 million tonnes, a 4.87 per cent increase; and the UAE produced 2.74 million tonnes, an 8.57 per cent increase year on year.

But output from Saudi Arabia declined by 5.09 per cent to 4.29 million tonnes of crude steel in January-October 2017, driven by a decline in demand.

The biggest steel producers in the Middle East are Hadeed Sabic in Saudi Arabia, Ezz Steel in Egypt and Emirates Steel in the UAE. Their crude steel production volumes totalled 5.27 million tonnes, 3.66 million tonnes and 3.15 million tonnes respectively in 2016 but 2017 volumes were not immediately available.

Market participants have called for more protection for the Middle East against dumped steel, noting energy costs are increasing in the region and producers are finding it difficult to compete with low-priced imports.

“The only major, and emerging, market that is unprotected (in the global steel complex) is the Middle East, and it is a natural choice for mass producers of steel to dump cheap and sub-standard material,” BS Shetty, the commercial general manager at UAE-based hot-dipped galvanised coil (HDG) producer Al Ghurair Iron & Steel, said, speaking at the Arab Iron & Steel Union (AISU) summit in Casablanca, Morocco.

Steelmakers and governments must take protective action, given that almost half the region’s steel demand is being met by low-priced imports from China, Turkey, the Commonwealth of Independent States (CIS) region and Europe, all of which have excess capacity, George Matta, marketing director of Egypt’s Ezz Steel, said at the same conference.

Steel demand in the Middle East and North Africa (Mena) dropped in 2017 due to budget cutbacks and inflationary prices, he added – especially in Saudi Arabia and Egypt.
 

TRADE CASES

While industry participants say more protections for the Middle East steel sector are needed, the region’s governments have several duty regimes in place and continuing anti-dumping investigations, including the following:

Gulf Co-operation Council (GCC) nations – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE – proposed in May that the World Trade Organization (WTO) introduce safeguarding duties on imports of colour-coated coil. The suggested duty was 31 per cent of the cost, insurance and freight (Cif) value of the product for the first year, falling to 25 per cent in the second and third year. Duties will be introduced once the GCC’s Ministerial Committee approves the imposition of the measure, but the duty is yet to be approved. The investigation started in June 2016, and was prompted by a safeguard application filed by Saudi Arabia’s Universal Metal Coating Co (Unicoil).

The UAE passed legislation in May intended to create fairer competition and prevent the dumping of poor-quality imported materials in the country’s steel markets.

GCC nations said in September that they expect to make a final decision by the second quarter of 2018 on the imposition of anti-dumping duties on Chinese non-welded oil country tubular goods (OCTG) made of iron or steel with a radius under 16 inches.

Egypt made permanent for five years starting December 6, 2017, its anti-dumping duty on rebar from China, Ukraine and Turkey. Chinese rebar is subject to a 29 per cent tariff, Turkish rebar 7 to 22.8 per cent, and Ukrainian rebar 17.2 to 27 per cent, all calculated from the cfr price. Egypt imposed preliminary duties on the three countries on June 6.

But Middle East steelmakers remained the target of trade protection measures from other regions in 2017.

For example, Thailand announced in February final anti-dumping duties on hot-rolled coil imports from Iran, alongside Turkey and Brazil. Taxes on products from Iran’s Mobarakeh Steel were levied at 7.25 per cent, while the duty for other Iranian mills was set at 38.27 per cent.

And the more trade protections Middle Eastern countries impose, the more likely it is that regional producers will be exposed to retaliatory measures, reflecting the delicate balance policymakers must strike in their attempts to encourage local steel production.

MIDEAST TRADE MEASURES

Giving out its 2018 projections, it said that the trade protection measures in the Middle East could support local steel producers’ attempts to capture much of the increased regional steel demand expected in 2018.

GCC nations are due to make a final decision by the second quarter of this year on whether to impose anti-dumping duties on Chinese non-welded oil country tubular goods (OCTG) made of iron or steel with a radius under 16 inches. Meanwhile, Egypt decided in December to impose definitive anti-dumping duties on rebar from China, Ukraine and Turkey for five years. These add to measures that were considered or introduced over the past year in the region to stem imports of substandard steel products and safeguard the local steel industry Rebar imports to the Middle East decreased significantly in 2017 with demand in the region being met by local producers.

MIDEAST TO SET ASIAN PRICE

Steel exports from the Middle East, CIS and India are expected to be the main price setters in Asia in 2018, as production cuts in China over most of the first quarter leave a gaping hole for them to continue to wrestle their way in.

Steelmakers in India, Turkey and the Middle East will likely find it easier to raise their offers this year due to Chinese steel products losing their competitiveness, with most mills in China preferring to focus on the more lucrative domestic market. The only consideration that these non-Chinese mills have is how much margins they are willing to forgo in order to move cargoes to the Asian market. In the billet segment, for instance, Iran-origin offers to Thailand are expected to influence buyers’ bid levels this year, with these products set to remain the most competitive in the spot market. “Iran-origin offers will be one of the most crucial factors for the Asian spot market as buyers will always look to Iran-origin cargoes to set their bids,” a trader in Southeast Asia told Metal Bulletin.