Emirates Steel aims to support trade and business in the UAE by purchasing local scrap material to use as feedstock.
The company said it had pledged, along with other steel producers, to purchase local scrap at international prices and said it expected to purchase more than 1m tonnes of scrap metal per year.
The UAE’s Ministry of Economy recently banned UAE companies from exporting scrap iron in a move that aims to help local production facilities maintain business continuity by ensuring that they have easy access to raw material supplies.
Emirates Steel said it typically used direct reduced iron and ferrous scrap as the main feedstock for its electric arc furnaces and currently scrap accounted for 30% of the raw material in the company’s Steel Making Plant One (SMP1).
It said it planned to adopt greater use of scrap as feedstock in part because of the surge in iron ore prices.
While long-term iron ore prices hovered around $30 per tonne in the past, the onset of the China boom sent them skyrocketing towards $200 per tonne in the mid 2000s.
As supply caught up with demand prices fell to around $100 per tonne, still well above the long-term average in the industry.
Emirates Steel CEO Saeed Ghumran Al Remeithi said: “The company is committed to supporting the steel industry value chain and will ensure we stand by the Ministry of Economy decision to prevent the export of scrap materials that are considered prime feedstock in manufacturing steel.
“Moreover, as scrap is turned into an added-value product, manufacturers are forced to import it from abroad at high prices because it is an important component in many industries. Currently the local steel industry needs the entire local scrap business to sustain its operations.”
Emirates Steel said that in 2019 it only used 280,000 tonnes of scrap material due to difficulties in sourcing it locally.
The UAE is Asia’s second largest scrap exporter after Japan, making up 1.6% of the world’s ferrous scrap exports with a scrap reserve of 1.5m tonnes per annum.
Leading export markets are India (31%), Pakistan (25%), and Oman (11%).
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