Tight credit may further slash Dubai steel imports

NEW YORK, June 24 (Reuters) - Dubai's steel imports could drop further as the tightness in credit availability is threatening ongoing construction projects, the managing director of Abu Dhabi Metal Pipes & Profiles Industries Complex (ADPICO) said on Wednesday.

Ali Hosseini of ADPICO, one of the top steel pipe producers in the United Arab Emirates, told a steel conference organized by the American Metal Market that bank lending has become even scarcer since late last year as the housing demand in Dubai has slumped after the global recession.

"The major problem is oversupply. The occupancy rates for the properties finished are at about 25 to 30 percent. The crisis has caused a lot of people to leave the city," Hosseini said.

"Financing issues can cause projects underway to come to a halt," he said.

According to Hosseini, Dubai's rebar imports dropped to around 250,000-300,000 tonnes from 550,000 at its peak last year, when the price of rebar and billet, key raw materials for construction, have rallied to record highs.

Since then, several mills and traders have been stuck with high cost inventories, turning to financial institutions for financing of those material.

"Banks had been hit badly by the stock liquidation and now they are very hesitant to finance stocks. If they do, they are looking for very high margins," he said.

The low demand has forced ADPICO to reduce output, Hosseini said, adding the Dubai operation was running with a 60 percent capacity utilisation.

"The main test will be August and Ramadan," he said, referring to the Muslims' holy month, where the economic activity tends to slow down dramatically in the Middle East. (Reporting by Humeyra Pamuk, Editing by Marguerita Choy)