UAE: Domestic ferrous scrap index rises $2/t w-o-w; moderate activities seen in export market

The UAE's domestic scrap index rose by AED 8/tonne ($2/t) w-o-w, reflecting a stagnant market trend amid minimal trades. However, a few mills showed interest with inquiries after a long pause and limited bookings.

BigMint's bi-weekly assessment revealed a nominal rise in HMS (80:20) processed scrap prices, which stood at AED 1,249/t ($340/t), DAP Abu Dhabi, from AED 1,241/t ($338/t) in the previous week.

In BigMint's Week 37 market survey, nominal trade activity was observed, with around 5,000-6,000 t of HMS processed and shredded scrap traded at AED 1,250-1,330/t, on a DAP Abu Dhabi basis.

As per an Abu Dhabi-based buyer, HMS (80:20) processed scrap is currently priced at AED 1,240-1,250/t, while shredded scrap stands at AED 1,330-1,340/t. The market remains stable with nominal inquiries, as rebar prices hold firm but sales are moderate.

Export market: Scrap export demand was sluggish, particularly from Pakistan, where buyers are pushing for shredded scrap prices to drop further to $385-390/t--previously the rate offered for HMS (80:20).

Additionally, buyers are expressing concerns over the quality of exported material, primarily from Abu Dhabi, citing yield issues and impurities. They are now calling for better quality assurance before making any new inquiries.

HMS (80:20) Spread

The average spread between the CFR Nhava Sheva HMS (80:20) and UAE local HMS (80:20) processed scrap saw a decline, reaching approximately $19-20/t, following the uptrend in UAE domestic scrap prices. Imported HMS (80:20) prices, CFR west coast India, remained downward throughout this week and reached $366-369/t, while UAE HMS (80:20) processed scrap prices remained at $340/t DAP.

Rebar market

The UAE is set to tighten control over its rebar industry by introducing a conformity assessment scheme for the rebar value chain, ensuring compliance with quality standards for steel used in concrete reinforcement. The scheme, expected to be implemented by December 2024, will cover the entire production and supply chain, including billets, whether imported or produced domestically and will require mandatory certification of conformity.

The initiative, led by the Ministry of Industry and Advanced Technology (MoIAT), aims to level the playing field for rebar producers and prevent harmful business practices. Once certified, manufacturers or their representatives must display the Emirates Conformity Assessment Scheme (ECAS) mark on product packaging and documents.

The certification process will be governed by MoIAT, with UK Cares and SGS overseeing inspections. The move is part of the UAE's broader efforts to regulate its steel sector and ensure high-quality standards, safeguarding margins for local mills and preventing the influx of substandard rebar. Concerns over transactions involving Iranian-origin steel, which could lead to US sanctions, have also been raised by industry insiders.

Saudi Arabia leads construction activity in the Middle East region, fueled by an extensive project pipeline. However, project implementation has fallen behind expectations, with a 34% decline in commissioned project valuations to $164 billion in 2024, down from $250 billion the previous year, according to Knight Frank. Political uncertainties and fluctuating oil prices have impacted progress, although the government remains focused on key initiatives like NEOM and The Line, which received $28.7 billion.

Outlook

Industry experts predict that domestic ferrous scrap prices will remain range-bound, with a few mills resuming procurement after a prolonged pause. The tightening of the rebar value chain is expected to affect the quality of materials produced in the upcoming cycle, adding pressure on manufacturers to meet higher standards.