Conares, a prominent downstream steel products producer, highlights it has set new benchmarks in steel processing that are helping it to open overseas markets for its offerings.
Based in Dubai, Conares is centrally located to serve major markets globally. Its extensive clientele includes, pre-engineering companies and steel trading and construction firms. As well as having a strong foothold in the UAE, Conares has penetrated export markets within the GCC area, the wider Mena region, North America, Latin America, Europe, Australia, Singapore, Hong Kong and the Indian Subcontinent.
The company exports close to around 40 per cent of its production. It says its popular export items are pipes and tubes, which are mainly delivered to western countries.
A main reason why Conares has been able to attract overseas customers is its state-of-the art manufacturing plant and the high-priority it accords to quality.
“Our cost-effective pipe products go through stringent quality assurance procedures. The products are CE approved and recognised by the Dubai civil defence authority for sprinkler systems in high-rise buildings,” the company says.
Capacity at its manufacturing facilities in the Jebel Ali Free Zone is more than 750,000 tonnes per year. This includes 500,000 tonnes of steel rebar, ranging from 8 mm to 40 mm, and 250,000 tonnes of round, square and rectangular tubes with sizes from half inch to four inches. The firm has also more than tripled its production capacity in the last 10 years and made strategic investments in the Jebel Ali Free Zone (Jafza) that have helped it expand its market share regionally.
Among the region’s few major privately-owned steel products manufacturers, Conares has investment worth more than $150 million in the steel industry and is a leader in the production of 8 mm to 40 mm rebars, and half inch to four inches diameter pipes and tubes.
As the Middle East region focuses on infrastructure development, Conares will serve as a prominent player meeting growing infrastructure requirements, says Bharat Bhatia, the chief executive officer. The company is looking at enhancing its steel processing capacity to one million tonnes by next year to meet new demand expected to surface in the coming years.
Established in 2001, Conares initially focused on steel trading; then, following extensive partnerships with renowned steel plants across the world, it brought world-best competencies to the region by setting up its own advanced manufacturing plant in the UAE.
GROWTH AND STRATEGY
Last year the company witnessed significant business growth, said Bhatia.
“Our targeted turnover for 2013 was to exceed Dh750 million ($205 million) and we have exceeded it,” he says. He anticipates greater demand as Conares ramps up production to meet market requirements.
“The advantage of buying from us as a local producer will reduce the cost of inventory and the risk of price fluctuation,” says Bhatia.
Commenting on the growth strategy, Bhatia says: “Our current combined plant utilisation is about 65 per cent. The pipe mill capacity is at 40 per cent, galvanising capacity at 100 per cent and rebar capacity at 60 per cent. We are considering further capacity increases in galvanising and widening the production range of our pipe mill.
“The diversification plan we currently are contemplating is a lateral movement of what we have at the moment. But we are not discounting the possibility of backward integration. But this is all a subject of studies currently ongoing, so we would rather discuss this at a more appropriate time when we are more prepared to move forward.
“We will not hesitate to increase and diversify our capacity as long as we see a market requirement for it.”
About trends in the construction industry, Bhatia acknowledges there are positive movements as projects affected by the economic downturn, are now getting completed. This, he says, paves the way for the future projects.
“The UAE market is a pretty much balanced market as far as rebar requirement are concerned. Demand is estimated to be around 220,000 to 250,000 tonnes per month and this is practically covered by the installed capacity of local producers of about 300,000 tonnes per month.
“The market is expected to keep a constant demand pending possible developments that can come into place later this year. If these developments fall into place, we can say that local demand can conservatively grow at single digits.”
“Although the market is overall balanced in demand and supply, the monthly consumption of rebars does not match the delivery capacity of the mills. So rebars have to be imported which in turn creates an oversupply thereby aggravating the demand-supply mismatch at certain times,” explained Bhatia.
“Local steel manufacturers also face competition from Turkey. China’s disadvantage is its distance” he concluded.