The UAE’s steel re-rollers are facing a tough summer as falling demand for steel coupled with lower steel prices over the last three months are putting the sector under increasing pressure.

A local steel industry expert says that 2010 has been a better year for the industry than 2009, but volatile prices have led to concerns over profitability.

“In 2010 it has just not been possible for re-rollers to buy billets and be guaranteed to turn a profit on their products,” the expert says.”So [re-rollers] have to gamble each time and that makes it very difficult.”

“I believe that all the steel company’s [in the UAE], with the exception of Emirates Steel [Industries] will have to be careful with their finances,” the source adds.

The volatile market has caused the UAE’s second largest steel manufacturer, Rak Steel, to stop production at its 500,000 tonnes-a-year plant in late July.

“Rak Steel is a good example of what a re-roller is experiencing at the moment,” the expert says.   

Rak Steel said it made the decision because of the fluctuating cost of the raw materials it uses to make steel rebar, reinforcing steel bars used in the construction industry.  

The steel price in the UAE is currently between $571 and $599 per tonne.