A recovery in steel prices helped Industries Qatar (IQ) improve its performance on-quarter in the second quarter. In the first half of 2019, however, IQ subsidiary Qatar Steel (Qasco)’s revenue still fell -23% on-year to QAR 2.31 billion ($634.6 million), while gross profit was down -80% to QAR 125m.
Wire rod sales in fact rose 33% in H1 to QAR 158m, but bar sales declined -13% to QAR 1.91 billion and billet sales fell -66% to QAR 247m. Sales in Qatar accounted for 74% of H1 revenue versus 53% in the year-earlier period, while United Arab Emirates comprised 16% versus 14%.
Sales volumes in the steel segment were moderately down due to weak demand in the domestic market and increasing international competition, IQ says without providing tonnages. “The fierce international competition has forced the prices to decline further compared to the previous year,” IQ says in a report seen by Kallanish.
“In the domestic market, the prices were affected by the relatively lower demand in the current period due to the market almost reaching its matured stage as the majority of the large infrastructure projects have been completed, while the regional demand was also affected by the availability of low-price steel from non-GCC producers, especially Turkey,” IQ comments.
Prices in other markets, such as the Far East, were affected by the supply of low-cost steel from countries like China, IQ adds.
IQ’s consolidated H1 revenue, including its petrochemicals and fertilisers subsidiaries, fell -18% to QAR 6.7 billion, while net profit fell -42% to QAR 1.46 billion due to lower revenue and earnings from joint ventures.
Bahrain-based steel holding Foulath, in which Qasco holds a 25% stake, meanwhile, reported a 57% surge in first-half revenue to QAR 842.7m. Qasco’s investment in Saudi steelmaker Solb Steel, in which it holds a 31.03% shareholding, was fully impaired in December 2018 and IQ’s share of results in Solb was therefore nil.