Hamriyah Steel in UAE Set to Encounter Difficulties Amid US Sanctions Implementation
Hamriyah Steel in UAE Set to Encounter Difficulties Amid US Sanctions Implementation

Hamriyah Steel in UAE Set to Encounter Difficulties Amid US Sanctions Implementation

  • 14-Apr-2023 3:42 PM
  • Journalist: Patrick Knight

UAE: Hamriyah Steel, a rebar rolling company based in UAE, is likely to encounter operational challenges soon as it has been listed in the latest round of US sanctions. The Office of Foreign Assets Control of the US Treasury Department (OFAC) and the UK jointly declared new sanctions on Alisher Usmanov's facilitation network on April 12. Apart from Metalloinvest, a former subsidiary of Metalloinvest in UAE, Hamriyah Steel, has also been slapped with penalties by the United States.

According to sources, Hamriyah Steel has a nominal capacity to roll 1 million metric tons of rebar per year, with a monthly supply of approximately 80,000 metric tons. The company does not produce its own billets and has been sourcing semis from Russia in the past. However, it has shifted its focus to GCC origins for more favourable billet supply. With the recent sanctions, sources predict that the company may encounter financial challenges first.

It has been reported that due to their ties to international credits, all UAE banks are set to close the accounts of Hamriya. As a result, the banks will no longer be engaging in any dealings with them. Additionally, sources have revealed that Hamriya imports spare parts, materials, and equipment for their Steel mill, but suppliers may now be hesitant to engage in business with them due to fears of secondary sanctions. This has also raised concerns among insurance companies, like previous situations involving other Russian Steel producers that have already been sanctioned.

According to sources, sourcing billets may pose a challenge for Hamriyah, as the company can still obtain them from Metalloinvest, but at a much higher cost compared to the lower rates they were getting from Iran. This could adversely affect their competitiveness. Many sources are currently assessing the situation and predicting that Hamriyah may have to reduce or halt production within the next three to four months unless a viable solution is discovered. However, experts in the Emirati rebar industry believe that even if production is stopped, there won't likely be a shortage of supply in the UAE market.

In the UAE market, approximately 20,000 mt of rebar was being supplied each month. However, it is predicted that this amount will be conveniently and rapidly filled by other re-rollers in the region and Oman. In the first quarter, it is estimated that the average monthly domestic rebar consumption in the UAE was around 185,000 mt, and is expected to be at around 170,000-180,000 mt in April and May.

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