Trade tariffs to remain a concern for steel business: Jazeera Steel

Al Jazeera Steel Products Co SAOG, a leading Omani manufacturer of steel pipes and structural steel products, says it is braced for possible ramifications from a contentious US tariff increase on its business.
The Suhar-based firm warned that Washington’s decision to impose a 25 per cent duty on steel imports, coupled with other tensions over global trade, would act as an unhelpful damper on market sentiment.
“The international situations on trade, tariffs & embargoes will remain a concern for the rest of the year, and as a company we will continue to monitor the situation and constantly strive to mitigate the various impacts of any further developments,” said Amal Suhail Salim Bahwan al Mukhaini, Chairperson of the Board of Directors of Jazeera Steel.
The publicly traded company, which is listed on the Muscat Securities Market, has been an exporter of steel pipes to the US market, although volumes have dwindled of late, in the wake of US anti-dumping measures against the firm.
In March, US President Donald Trump imposed hefty tariffs on imported steel and aluminium, citing the need to boost US industry. Proclamations signed by the Trump levy a 25 per cent tariff on steel and a 10 per cent tariff on aluminium imported from all countries except Canada and Mexico. The tariffs were ordered under Section 232 of the Trade Expansion Act.
Oman’s Ministry of Commerce and Industry has long voiced support for Omani exporters, while pledging legal assistance to companies hit by anti-dumping actions initiated against them. The Sultanate, among other countries in the Arabian Gulf, are understood to have appointed law firms to seek exemptions from the US government from the latest tariff increases.
Commenting on the likely repercussions of the move for the steel industry, Amal al Mukhaini of Jazeera Steel stated: “We also saw the US administration impose 25 per cent duty on steel imports (Sec 232 Tariffs) in the second quarter, leading to EU examining a need for safeguards and a slew of protectionist measures from various economies.
This in a sense led to dampening of sentiments towards the end of the first half,” she noted in the Chairperson’s Report for the half year ended June 30, 2018.
However, despite the “market conditions and headwinds”, Jazeera Steel achieved its “best ever” production and sales in a half-year, according to the Chairperson. The Group, which has distribution operations in key markets in the GCC, posted a 30 per cent increase in net profit for the six months ended June 30, 2018. Net earnings climbed to RO 2.622 million this year, up from RO 2.019 million for the same period of 2017. Revenues jumped 37 per cent to RO 63.179 million, while production rose 15 per cent to 230K tonnes.
Seeking to boost its regional presence, the company is seeking to establish warehouses and representative offices in key markets in the Gulf. Last year, it decided to open a warehouse in Dubai in a move to boost access in one of the region’s most active markets.
“Measures have also been taken to diversify the product portfolio in both the mills; these measures are expected to bear fruit in 2018. Rebar production and Sales was leveraged as and when needed, so to give optimal spread to our production capacities. Margins on the same are expected to improve by leveraging our regional warehouses in 2018,” Jazeera Steel said in its 2017 Annual Report.