Unwillingness on the part of foreign suppliers to sell to Yemeni customers on letter of credit (L/C) terms is one of several problems faced by the country's steel producers.

Shipping and other activities in the country have also been adversely impacted by difficulties in the L/C market as Yemen struggles to cope with popular protests and an indigenous Al-Qaeda wing.

No more L/Cs

Suppliers of Aden Steel are no longer prepared to do business with the Yemeni company on L/C terms, according to a senior manager at the country's largest steel mill.

He says the suppliers lack confidence in the firm's ability to meet its commitments, and the company now has to pay cash up front for all its supplies.

Civil unrest

Anti-government protests, compounded by Al Qaeda attacks, have severely depressed the Yemeni steel market over the last six months.

Production has dropped an estimated 60-80 per cent while sales may have declined by as much as 75 per cent, according to industry sources.

Other impacts

Another negative impact of the unrest in Yemen on its L/C markets is a US dollar shortage, which makes L/Cs harder to come by.

The L/C shortage in turn has slowed down ship container trade in the country (DC World News, 15 April 2011).

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.