AGSI's Ambitious Scrap Surge: UAE Steel Revolution

Arabian Gulf Steel
Arabian Gulf SteelImage Source: Arabian Gulf Steel

Synopsis:

Arabian Gulf Steel Industries (AGSI), a UAE-based steel producer, revealed plans to double scrap usage by early 2025, aiming to enhance the country's steel manufacturing capacity. AGSI's chief commercial officer, Deepak Bhandari, outlined an expansion program and the construction of a new meltshop. The move aims to increase monthly scrap purchases from 50,000 to 100,000 metric tons. However, concerns arise over potential shortages as UAE's steel scrap market, consuming 120,000 metric tons monthly, anticipates a rise to 150,000 metric tons, leading to potential reliance on imports.

Article:

In a recent MEIS conference, Arabian Gulf Steel Industries (AGSI), a prominent player in the UAE's steel industry, announced ambitious plans to double their usage of scrap by early 2025. The company's chief commercial officer, Deepak Bhandari, shared insights into their expansion strategy, targeting a significant boost in the country's steel manufacturing capacity.

Currently purchasing approximately 45,000-50,000 metric tons of scrap monthly, AGSI aims to raise this figure to around 60,000 metric tons after completing its ongoing expansion program by the second quarter of the following year. Additionally, plans for a new meltshop, still in the design stage, could further escalate their scrap consumption to an impressive 100,000 metric tons per month.

According to an AGSI official, the local steel scrap market in the UAE currently consumes about 120,000 metric tons per month. Anticipated investments in steelmaking capacity and scrap purchasing could push this figure to approximately 150,000 metric tons per month by the second quarter of the following year. However, challenges emerge as Rajesh Agarwal, CEO of recycler RKG International, highlights the existing shortage of scrap supply in the UAE market.

Agarwal notes that while the current consumption is around 100,000-120,000 metric tons per month, the optimal usage should be 200,000 metric tons. With increasing capacity expected in the UAE, Agarwal predicts future raw material shortages, potentially forcing mills to turn to the import market.

The potential shift in Emirates Steel's reliance on scrap over direct reduced iron (DRI) raises concerns of a scrap shortage in the UAE. As Agarwal points out, if Emirates Steel adopts this strategy, the UAE could soon transition into a net importer of scrap, similar to Saudi Arabia, where local availability is restricted, and scrap imports are the sole option.

Conclusion:

AGSI's ambitious plans to double scrap usage signify a significant step toward advancing the UAE's steel manufacturing capacity. However, the potential surge in demand raises concerns over scrap shortages in the local market. As the UAE anticipates becoming a net importer of scrap, strategic measures will be essential to maintain a stable supply chain, ensuring the continued growth of the steel industry in the region.

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