Dubai-based Conares plans $25m expansion of Jebel Ali plant
25 November 2015
Conares, the Dubai-based steel products manufacturer, is undertaking a US$25 million expansion of its factory in Jebel Ali.
Its chief executive and founder Bharat Bhatia said that the company, which currently produces 500,000 tonnes of steel rebar and 250,000 tonnes of steel pipes and tubes of diameters between 0.5 inches and 4 inches, will add a new mill capable of producing larger steel pipes and tubes of up to 12 inches.
“The total new investment we have committed is around $25m,” he said. “Our previous investments have been to the tune of $200m to $220m. So all in all, it will be $250m assets for us invested in the UAE.”
He said that the new mill would open up more markets in Australia and Europe for Conares, which is one of the biggest privately owned steel- making companies in the UAE, as well as allowing it to produce pipes for infrastructure projects as opposed to primarily supplying oil and gas projects.
“In the 0.5 inch to 4 inch segment, we felt it was already becoming too crowded,” he said. “But when you go up to 12 inches, it puts us in the slot that allows us to cater to a bigger segment.”
Speaking on the sidelines of The Big 5 construction products trade show in Dubai, he argued that the recent slump in steel prices – the price of rebar has dropped by 14 per cent in the UAE this year, according to Colliers – has actually been good for its business as falling prices have left stockists nervous of ordering from China months in advance at a price that could subsequently plummet by the time deliveries are made.
Mr Bhatia said that Conares’ total volumes produced had increased by 35 per cent over the past 12 months, and its revenue had increased by 18 per cent. He anticipated a turnover of Dh900m to Dh950m for 2015, but thinks this could grow to Dh1.5 billion to Dh1.7bn next year on the back of its expanded facilities and a growing market.
“It has allowed us to increase our volumes on their shelves. They buy finished goods from us,” said Mr Bhatia. As a result, its mill has been running at a capacity of 92 per cent during the last quarter of 2015, compared to 65 to 70 per cent in the same period a year earlier. Mr Bhatia also argued that the number of infrastructure projects needed to be completed before Dubai’s Expo 2020 would mean that demand could grow from 2016 onwards, with a growth rate of at least 10 per cent a year from 2017.
About 85 per cent of the steel Conares produces is for the UAE market, the company said.
Conares’ main domestic competitor, Emirates Steel, also said at the Big 5 that it had increased production volumes in the first three quarters of 2015 to 2.27 million tonnes by the end of September – a year-on-year increase of 6 per cent.
It is forecasting a 5.1 per cent increase in steel consumption across the Arab region next year to 57.3 million tonnes.
Emirates Steel is owned by Senaat General Holding Corporation – a company set up by the Abu Dhabi government as part of its diversification plans.