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The UAE: Domestic ferrous scrap index falls by $3/t w-o-w on weaker steel demand

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Melting Scrap

BigMint Bureau

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9 Aug 2024, 19:50 IST

The UAE: Domestic ferrous scrap index falls by $3/t w-o-w on weaker steel demand

The UAE domestic scrap index fell by $3/t w-o-w amid continued pressure due to sluggish local construction activities and weak sentiments in key scrap-importing countries. The summer heat and reduced construction work have compounded the situation, with many decision-makers on holiday. Additionally, cheaper Chinese steel is pressuring down domestic prices.

After a short halt, UAE steelmakers returned to the market with bids for HMS processed at around AED 1,300-1,310/t on DAP basis.

Market sentiments remain subdued, exacerbated by a recent Turkish imported deal at lower prices. UAE steelmakers are bracing for a slow period, with some targeting a further price drop to AED 1,280/t in HMS (80:20) processed in upcoming transactions.

BigMint's bi-weekly assessment shows a drop of AED 9/t ($3/t) for HMS (80:20) processed, with prices in a range of AED 1,305-1,310/t ($355-356/t) DAP Abu Dhabi.

As per some buyer-side sentiments, the market is currently experiencing a slow pace. Mill prices for HMS processed scrap were at AED 1,320/t, while shredded was indicated between AED 1,415- 1,425/t. In the domestic market, HMS processed was trading between AED 1,300-1,310/t, and shredded at around AED 1,400/t.

As per some trade sources, currently, shredded scrap is not favoured in the UAE market due to its lower yield and poor quality, because it is often mixed with sand. Unlike in Europe or the US, where shredded scrap is more desirable, here it has not been well received. The last workable levels for shredded were AED 1,380-1,400/t, but buyers are showing minimal interest and prefer PNS grades available at AED 1,350/t.

As per market participants, the global market is currently experiencing a downward trend, with both hot-rolled coil (HRC) and ferrous scrap prices on the decline. This broad-based decrease reflects a general weakening in demand and market sentiments across the industry.

As per BigMint's market survey for week 32, the trade volume was at around 4,000 t, comprising both HMS (80:20) processed and shredded scrap. Specifically, 3,000 t of HMS (80:20) processed scrap was sold at AED 1,315-1,320/t, on a DAP Abu Dhabi basis with around 2,000 t of shredded sold at AED 1,410/t, DAP Abu Dhabi.

Export market: The UAE's new tariff on ferrous scrap exports, implemented in January, initially halted shipments. However, some sellers have circumvented this restriction by mis-declaring HS codes.

The current working price for shredded scrap from the UAE to Pakistan is $435/t. Specific deals include 1,800 t of fabrication HMS at $425/t CFR Qasim and 500 t of shredded scrap at $430/t CFR Qasim. HMS (80:20) shipments from the UAE to India (Mundra Port) were at $400/t, with container charges ranging from $250-300 per container. Additionally, concerns are rising over the political situation in Bangladesh, where widespread protests and violence have introduced uncertainty about the continuation of shipments had further complicated market dynamics.