Can you tell us about the current activities of Al Nasser Enterprises?

Al Nasser Industrial Enterprises LLC (ANIE) is the holding company of the group for all industrial production. ANIE is 100 percent-owned by Group Holding Co. Al Nasser Holdings.

ANIE has a diversified production base within the GCC in four major sectors: Steel industry, rotomolding, power sector - transformers & switchgears and steel fabrication.

What are your production capacities?

In the framework of our steelmaking activities we are producing 250,000 tons of direct reduced iron per annum, 500,000 tons of steel billets and 150,000 tons of rebars

How much of your production volume is sold in the UAE?

About 50 percent of our billets and 80 percent of rebars are sold in the UAE.

How do you see the current market situation for rebars?

From mid-May 2010 the market for rebar has been getting worse. With materials in traders' stocks having cost $700/mt, the market expectation is for $575/mt due to recent reduction by Turkish mills to levels of $530/mt CFR Dubai. Demand is also not so encouraging after the panic buying in March and April.

You are operating an EAF. How do you obtain supplies of scrap and also of other raw materials if any?

Scrap and DRI feed our billet manufacturing furnaces. The supply situation is very difficult.  In fact, many times our production has suffered due to insufficient raw material availability.

What is the level of local scrap supply in the UAE?

Supply is about 30,000 mt per month of scrap in the UAE.  Scrap prices will pick up since prices of DRI feedstock, i.e, iron ore pellets, are unlikely to go up further in Q3 2010.

How is the supply-demand balance of rebars in the UAE lately? Is there a supply shortage? If so, what do you think the major reasons could be?

I do not think there has been any supply shortage in the UAE lately. There was indeed some panic and consequent hoarding created by the sudden price increase during April 2010, and some people interpreted this as a shortage.

Do you have any plans to increase your production volumes?

We have no plans to increase any production volumes at this time beyond the 400,000 mt per annum rolling mill under construction and likely to be commissioned in Nov 2010.

Are you expecting to improve your sales volumes in the second quarter of the year? What are your expectations from the rest of the year, price and demand wise?

Given the current market environment, in the second half of the year we do not expect any increase in our volume of sales.  Indeed, Turkish reductions of prices may further aggravate the problem and depress sales.  In the second half, we expect the price of debars to be around $600/mt at least.

What do you think about the easing of raw material (scrap) prices?

Yes, we have seen that they are easing to $360/mt and even to $320/mt.

Are you planning any capacity cuts in production during this quarter?

We are certainly considering cuts in our production in this quarter, of up to 50 percent.

Do you think long product demand has any chances of picking up in the next six months, and could prices also pick up?

In my view, demand may pick up in the fourth quarter while prices may recover to US$650/mt, unless the economic situation doesn't get worse any further.