UAE: Domestic ferrous scrap index hits 6-month low; firm price outlook after ESA rebar price hike

This week, the UAE domestic scrap market continued its downtrend, with prices dropping by AED 45/tonne ($12/t), reaching levels not seen since 18 March 2024--a six-month low. This decline reflects a weak market with no significant demand.

BigMint's bi-weekly assessment showed a notable decrease in HMS (80:20) processed scrap prices, which fell to AED 1,220/t ($332/t) DAP Abu Dhabi, down from AED 1,265/t ($344/t) in the previous week.

An official from a major mill said,"UAE domestic scrap prices have come down. Mills' bookings are slow while activities are need-based again continuing with limited rebar purchases in the market. New projects are yet to progress."

As per a major trading house representative, trades were heard between AED 1,250 to 1,275/t depending on the size of LPO quantity tentatively around 2,000-3,000 t. Expecting a further decline in the near term.

According to market insiders, uncertainty in the UAE rebar sector has eased following a clarification from the country's largest steel producer regarding its pricing strategy for the upcoming sales period. After a strategic pause, Emirates Steel Arkan has dispelled speculations about future market trends. The announcement of rising rebar offers is expected to impact the market by the second week of September. The new price for 12-32 mm rebar, effective for September production, has been increased by $20/t to $665/t (AED 2,442/t) ex-works. However, Emirates Steel Arkan has maintained its rebar prices for July and August production.

Recent industry reports indicate that the UAE's crude steel production stood at 229,000 t in July 2024, reflecting a 21% y-o-y decline.

Domestic scrap prices

• HMS Processed: Offers were at AED 1,240-1,250/t; bids at AED 1,210-1,220/t.
  
  
• Shredded: Offers were at AED 1,330-1,340/t; bids at AED 1,300-1,310/t.
  
  

Export market participants noted that weakened export demand has put additional pressure on domestic scrap prices. Although Emirates Steel Arkan has raised rebar prices for September deliveries, but not yet impacted the domestic scrap market.

Export offers

• Pakistan: Demand remained sluggish, with UAE HMS offers at $375/t CFR Qasim, and bids at $370/t. Shredded offers were at $390-395/t CFR Qasim.
  
  
• India, Bangladesh: Offers are currently limited from the UAE, HMS(90:10) was offered at $395/t CFR Chattogram.
  
  

"Export offers for HMS also dipped to 380/t for HMS to Pakistan, and for India, we are trying for 375/t but have less response at these levels. We have sold 500 t of HMS mix to Qasim at $380-385/t," said a trader.

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 $34-36/t, following the downtrend in UAE domestic scrap prices. Imported HMS (80:20) prices, CFR west coast India, remained stable at $368-370/t, while UAE HMS (80:20) processed scrap prices remained at $330-332/t DAP.

UAE foreign trade reaches record AED 1.395 trillion in H1CY'24: The UAE's foreign trade soared to a record AED 1.395 trillion ($379 billion) in the first half of 2024 (H1CY'24), marking an 11.2 % increase y-o-y. Non-oil exports grew by 25% to AED 256.4 billion, with a 33.4 % surge to the top 10 trading partners. Re-exports reached AED 345.1 billion, led by growth in telephone devices and diamonds. Non-oil imports approached AED 800 billion, up 11.3 %, with top markets contributing nearly half of total imports. Sheikh Mohammed bin Rashid Al Maktoum highlighted this all-time high as a testament to the UAE's strengthened global trade ties and resilience amid global challenges.

Outlook: Traders had anticipated a further decline in domestic scrap prices due to weak demand. However, major steelmakers have unexpectedly raised their rebar prices, sparking speculation that domestic scrap prices might experience a slight increase in the coming week.