UAE: Domestic ferrous scrap index hits 3-month low on sluggish demand

This week, the UAE domestic scrap market saw a significant price drop of AED 49/t ($13/t), reaching levels not seen since 27 May, 2024. The decline, which marked a 3-month low, is attributed to weak demand and sluggish trading activity.

BigMint's bi-weekly assessment revealed a significant drop in HMS (80:20) processed scrap prices, which fell to AED 1,260/t ($344/t), DAP Abu Dhabi, from AED 1,314/t ($357/t) in the previous week.

An official from a major mill said, "There has been minimal purchasing activity this week with need-based buying, although prices for processed HMS and shredded scrap have dropped by almost AED 50/t."

In BigMint's Week 34 market survey, limited trade activity was observed, with around 2,000-3,000 t of HMS processed scrap traded at AED 1,265-1,275/t, on a DAP Abu Dhabi basis.

Another major steel mill official commented, "The market is extremely weak right now, with no one eager to place orders or hold inventory, as there's an expectation that finished goods prices will decline further in September."

Regarding buyer and seller indications, sellers in the UAE scrap market quoted prices ranging from AED 1,270-1,280/t for processed HMS (80:20) and AED 1,350-1,360/t for shredded on DAP Abu Dhabi basis. Meanwhile, buying indications for HMS processed were at around AED 1,250-1,260/t. Meanwhile, bids for shredded were observed in the range of AED 1,330-1,340/t.

HMS (80:20) spread: The average spread between the CFR Nhava Sheva HMS (80:20) and UAE local HMS (80:20) processed scrap saw an increase, reaching approximately $30-33/t, following the downward trend in UAE domestic scrap prices. Imported HMS (80:20) prices, CFR west coast India, remained stable at $370-375/t, while UAE HMS (80:20) processed scrap prices remained at $340-345/t DAP.

UAE rebar distributors expect price stability for September deliveries despite falling Far East prices. A major primary steel manufacturer is likely to announce its rebar price quotes for September by week's end and as per market participants a correction is anticipated which is keeping buyers cautions.

A sector participant observed that despite a usual August decline in rebar sales, market remained moderate due to ongoing projects. Towards mid-September, rebar intake is expected to rise with the lifting of outdoor work restrictions and a surge in project activities. The price stability observed since late July has been advantageous for all stakeholders.

The domestic retail rebar prices have stayed steady since late July at AED 2,260-2,280/t ($615-620/t) delivered, with a primary producer quotes at AED 2,250-2,270/t ($612-618/t). Secondary mills have seen a slight decrease in prices, now ranging from AED 2,170-2,190/t ($590-596/t), down from AED 2,180-2,210/t ($593-600/t) two weeks ago.

The export market price levels have seen a drop this week on low-moderate level trade activities.

Bangladesh has experienced a decline this week due to weak buying interest and ongoing economic uncertainty. Buyers are cautious, anticipating further price drops as international offers soften. The UAE's HMS (80:20) offers to Bangladesh range from $385-390/t, with bids at or even $380/t CFR levels.

In Pakistan, buyers are taking a wait-and-see approach, expecting price stability amid slowed market activity due to the rainy season and cash flow issues from delayed payments. The UAE's current offer for shredded scrap to Pakistan is $400-405/t, with bids around $390-395/t.

Outlook: Market participants expect UAE's domestic ferrous scrap prices to remain within a stable range in the near term. Export activity is likely to stay subdued, as demand from key markets like Pakistan and Bangladesh is limited. This is due to seasonal factors and cash flow challenges in Pakistan, along with economic uncertainty in Bangladesh, despite a softening in global prices.