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Steel prices drive firms towards aluminium

There has been a definite swing from steel towards aluminium in major construction projects throughout the Gulf, according to industry experts.

There has been a definite swing from steel towards aluminium in major construction projects throughout the Gulf, according to industry experts.

This has come as a boon for foreign aluminium producers who supply the domestic markets in the region. Most of the aluminium produced in the area by Dubai Aluminium Co. (Dubal) and Alba, is very high grade and is exported out of the region for use in sophisticated industries like automobile production. Domestic demand for the construction industry is met largely by imports. “Prices of steel have been rising. Last year they shot up by 50%. We have seen a lot of substitution from steel to aluminium here,” said Anil Gupta, a general manager with Hindalco, India’s largest aluminium producer.

An obviously elated Gupta points out that his exports to the Gulf have risen by 60% year-on-year for the past couple of years. Previously, the company’s yearly export growth was between 5-7 %. “There are a lot of projects in Dubai. We continue to project growth,” Gupta said at the Big 5 Show that runs at the Dubai World Trade Centre complex until December 5.

He said unlike India, there is a large amount of usage of aluminium in building construction in the Gulf. “Here, the spend is high on facades. Most buildings are made of metal and glass. New ones that are coming up are purely aluminium. Then there is a stream of exhibitions like the Big 5 where almost all the stand work is done in aluminium.

“Also, aluminium provides some insulation from the heat by reflecting outward the heat and trapping the inside heat, thus saving on energy bills,” Gupta said.

“In fact, the tower created outside the Dubai World Trade Centre to mark the International Monetary Fund and World Bank annual meetings, has been created out of Hindalco supplied aluminium,” he proudly pointed out.

He, however, added that the Dubai market has matured and that it has reached sophistication where growth would be in value added products. And that is what the company is aiming at.

However, other regional markets continue to open up, Gupta said while pointing to the vast amounts of construction activity that is seen going around the area.

Like other exhibitors, Hindalco is looking at Dubai as a base to supply the demand in Iraq and Iran when the market opportunity arises.

“We plan to grow the market. We are exploring whether Dubai can be used as a base for Iraq and Iran. We would like to export for reconstruction in Iraq. We have not sold in Iraq. We began some supply to Iran recently out of India. But Dubai could be a springboard,” Gupta said.

He said Hindalco has been exporting some 800 tonnes of aluminium sheets and coils annually to the region for several years. Seeing the growing sophistication of the market, it plans to now start supply value-added products such as stucco, corrugated and flooring sheets.

“Last year, we had thought of coming out here with some kind of facility in Dubai. But that did not work out too well. It is not critical for us to set up a factory here as we can supply this market within four days from our depot in Bombay,” said the Hindalco GM.

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