Strong rise in Al Jazeera Steel sales

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MUSCAT -- Al Jazeera SteelAl Jazeera Steel Products Co SAOG has reported an impressive 87 per cent growth in steel sales during the first half of this year.

Revenues soared to RO 32.076 million this year, from RO 17.161 million during the same period last year.

Total production of steel products jumped 93 per cent to 107,671 metric tonnes (MT) this year, from 55,801 MT during the first half of last year. Sales, in volume terms, were 79 per cent higher at 105,266 MT this year, from 58,778 MT during the first half of last year.

As a result of the strong growth in sales, Al JazeeraAl Jazeera posted a net profit of RO 1.155 million during the first half of 2010, compared to a loss of RO 2.084 million during the corresponding half of 2009.

Commenting on the company's performance during the first half of the year, Sulaiman M Shaheen al Rubaie, Chairman, stated in the Chairman's Report: "From the beginning of this year, hot rolled coils (HRC) and billet prices, the two key raw materials used in our products, were buoyant and continued their upward trend through the beginning of the second quarter. The continuous rise in prices of HRC and billets was due to the persistent increase in raw material prices for steel making, supported by an overall increase in demand with restocking taking place.

Nevertheless, the market was not able to sustain this growth in demand for a long period, and both HRC and billet prices have come down by 20 per cent as compared to the first quarter. The volatility in raw material prices affected regional demand and most traders took a very cautious stand in building up inventories, while the construction sector in the UAE has not fully picked up to pre-crisis levels. Due to the wider application of Al JazeeraAl Jazeera's pipe products and the reputation that your company enjoys in the international market, we were able to improve our sales despite these adverse circumstances."

Al JazeeraAl Jazeera's merchant products, which primarily cater to infrastructure development, saw a significant downturn, the report said. Sales were affected negatively by "dumping" from international producers.
"Also, unlike our pipes, with our limited merchant product variety we were not able to cater to some of the other product categories demanded during this quarter. Currently, developments are going on to cover a broader spectrum of products, which are expected to be available from the fourth quarter of this year. With a wider range of products, the demand for merchant bars is expected to translate into much higher levels of capacity utilization during the last quarter," the Chairman stated.

Demand for Al JazeeraAl Jazeera's pipe products remained positive not only in the GCC market, but also in North America, according to the Chairman's report. The company has in hand a stable volume of orders for exports outside the GCC, compared to the same period of 2009. Export sales are expected to maintain the same trend in the coming months.

"The increase in demand is coupled with the easing of the recession and the restocking carried out by traders across the world. However, once again a very cautious approach is being taken to protect the company if a downturn occurs," Al Rubaie stated.

"With our excellent product and quality standards, we have been able to achieve higher volumes in the second quarter compared to the previous year second quarter and we are expecting growth in the remaining quarters. To achieve these goals, we have to be more vigilant and aggressive in procuring our raw materials at the right price and time in order to meet the market demand and optimise profitability," he added.

By Staff Reporter

© Oman Daily Observer 2010