By Humeyra Pamuk
UPDATE 1: State-owned company to go ahead with expansion plans, production to 1.85 million tonnes next year.
State-owned Emirates Steel Industries is going ahead with its expansion plans despite the global slowdown and aims to boost output to 1.85 million tonnes next year, a senior executive said on Monday.
"We believe there will be sufficient demand to absorb that production," Sridhar Krishnamoorthy, deputy chief executive at Emirates Steel Industries, said on the sidelines of Metal Bulletin's steel conference in Dubai.
He told newswire Reuters the company resumed production after a three-week suspension in September and he expected output to reach just below 1 million tonnes this year, up from 2007's 770,000 tonnes. He also said the company's target to increase capacity to around 3 million tonnes by 2011 was still intact.
Krishnamoorthy said the global slowdown had reduced steel demand and caused a sharp fall in prices. Scope for further price falls was limited, however, as the destocking process was slowly coming to an end.
"By the end of January I believe inventories will go back to normal levels," he said, adding he estimated there were around 1 million tonnes in the ports, yards and warehouses in the region.
"Since the last six weeks, talking to customers and the ports, I get the sense that ongoing projects still need steel and we see fresh bookings, so in general... it should clear by January," he said.
"We believe downside risk is minimal. The only direction for price to move is up," he said. (Reuters)