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The UAE: Domestic scrap prices down by $2/t w-o-w; buyers await clear market direction

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Melting Scrap

BigMint Bureau

774 Reads

8 Mar 2024, 19:43 IST

The UAE: Domestic scrap prices down by $2/t w-o-w; buyers await clear market direction

This week, scrap prices in the UAE witnessed a slight drop along with relatively dull market activity after gaining some momentum last week. The downtrend was majorly influenced by drop in the Turkish market. However, deal prices remained in the range of AED 1,200-1,220/t ($327-332/t) for HMS (80:20) processed on a DAP basis. Overall, buyers awaited clear market signals.

According to BigMint's week 10 market survey, shredded scrap bids and workable prices ranged from AED 1,290-1,310/t ($351-357/t), while HMS (80:20) processed was assessed at AED 1,190-1,210/t ($324-329/t)DAP Abu Dhabi. Abu Dhabi based mills have purchased around 3,000 t of domestic scrap so far, with prices ranging from AED 1,200-1,220/t ($327-332/t) (HMS sheared/processed) and AED 1,300-1,330/t ($354-362/t) (shredded) on a DAP basis.

BigMint's bi-weekly assessment showed an AED 6-8/t($2/t) drop for HMS (80:20) processed scrap grade, maintaining a price range of AED 1,200-1,202/t ($327/t) DAP.

Price trends and breakdown

Despite export duties making UAE scrap sales unprofitable, exports persist. A Sharjah-based trade sources indicated that processed HMS (80:20) was at AED 1,160-1,200/t ($316-327/t) and fabrication scrap at AED 1,200-1,250/t ($327-340/t) on DAP basis. This suggests alternative motives for exports, such as fulfilling existing contracts or strategic stockpiling by overseas buyers.

The current purchase price for HMS (80:20) stood at AED 1,130-1,160/t ($308-316/t) from mills, with transportation costs adding AED 45-50/t ($12-14/t) for a DAP price of AED 1,200-1,220/t ($327-332/t).

A supplier source said, the current price trend is AED 1,100-1,120/t ($302-305/t) for unprocessed HMS DAP Abu Dhabi, AED 1,190-1,210/t ($324-329/t) for processed HMS, and AED 1,300-1,320/t ($354-359/t) for shredded on DAP basis.

HMS (80:20) spread: The average spread between the CFR Nhava Sheva HMS (80:20) and UAE local HMS (80:20) processed scrap declined to $50-55/t, following the slight recovery trend in domestic scrap prices. Imported HMS (80:20) prices, CFR west coast India, remained slightly downward at $370-375/t, while UAE HMS (80:20) processed scrap prices remained at $326-328/t DAP.

Emirates Steel Arkan, the UAE's leading steel and building materials firm, reported a modest 0.8% increase in production for 2023, totalling 3.237 million tonnes (mnt) compared to 3.211 mnt in the previous year. While finished steel production slightly decreased, total steel sales dropped by 1.8% y-o-y to 3.1 mnt. Despite challenges in the global economy, the company's net profit surged by 18% to AED 602 million ($164 million), driven by higher sales of value-added products. With 71% of sales in the domestic market and 29% for exports, Emirates Steel Arkan remains a key player in both local and international markets.

In the scrap export market, indicatives for Bangladesh in HMS 1 and PNS mix were mainly at $425-430/t CFR Chattogram, followed by PNS scrap at $418-422/t CFR Qasim basis.

Outlook: Domestic scrap prices in the UAE are expected to remain range-bound. However, exporters may face hurdles due to export duties, dampening the outlook for the domestic scrap market.