Qatar Steel’s rebar sales fell -26% on-year in the first half of 2020 to QAR 1.42 billion ($390.1 million), while billet sales dropped -12% to QAR 276.6m, parent company Industries Qatar (IQ) says in a report seen by Kallanish. Rebar in coil sales dropped -37% to QAR 100.4m.

Qatar Steel idled some capacity from the beginning of April in order to cater for the domestic rebar market only, amid increased competition and declining margins in export markets (see Kallanish passim).

The idling of capacity resulted in a one-off impairment loss of QAR 1.22 billion. IQ’s steel segment sales fell -22% in H1 to QAR 1.79 billion and the segment sunk to a QAR 1.39 billion loss before tax versus a QAR 147m profit a year earlier. Excluding the one-off impairment, net loss would be down -211% on-year to QAR 164m.

“Qatar Steel took a prudent approach to impair the net book value of the facilities mothballed, as the Group foresees no possibility of restarting operations in relation to the mothballed facilities, in the immediate future,” IQ observes.

H1 steel sales prices fell -3% on-year as a result of Covid-19-pandemic-induced weaker demand in the form of reduced construction activity. Domestic sales volumes declined as many large infrastructure projects in Qatar neared or reached completion. “Nevertheless, near- to medium-term prospects for the Steel segment domestically remained encouraging,” IQ says.

Qatar Steel also incurred higher costs as it sold some expensive inventories carried forward from previous periods. Operating cost is expected to improve as savings associated with the capacity mothballing materialise over the coming quarters.