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UAE: Domestic ferrous scrap index rises by $8/t w-o-w amid increase in rebar demand

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Melting Scrap

BigMint Bureau

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4 Oct 2024, 20:00 IST

UAE: Domestic ferrous scrap index rises by $8/t w-o-w amid increase in rebar demand

The UAE's domestic scrap index rose by AED 29/tonne ($8/t) w-o-w, as major domestic steel mills continued to purchase scrap at higher prices, anticipating better rebar demand in the coming days. However, some mills showed mixed interest in the rising price trends, with moderate inquiries.

BigMint's bi-weekly assessment recorded a sharp increase in HMS (80:20) processed scrap prices, which stood at AED 1,254/t ($341/t) DAP Abu Dhabi, up from AED 1,225/t ($334/t) in the previous week.

In BigMint's Week 40 market survey, nominal trade activity was observed, with approximately 3,000-4,000 t of HMS processed and shredded scrap traded at AED 1,240-1,330/t on a DAP Abu Dhabi basis.

"Domestic HMS processed prices edged up, though trading activity remains limited, with offers hovering around AED 1240-1250/t DAP Abu Dhabi," a Sharjah-based supplier said. He added, "Shredded demand continues to be weak, with buyers showing interest around AED 1300/t DAP, but transactions remain sluggish."

"EMSteel scrap purchase prices have risen to AED 1240-1250/t DAP," commented a major domestic scrap trader based in Abu Dhabi. He further said, "The international market is also seeing an upward trend, with India purchasing HMS from the UAE at around 390/t levels from the GCC region."

Export market

Scrap export demand remained bearish, particularly from Bangladesh, where buyers are pushing for shredded scrap prices to drop further to $395-398/t--the previous rate offered for HMS (80:20) from the UAE. According to market insiders, the freight rate for a 20ft container from the UAE to Bangladesh stood at $1,100/t, further exerting downward pressure on the demand for UAE-origin materials.

In Pakistan, UAE-origin shredded scrap offers rose to $405/t, but demand remains slow due to weakened rebar sales and reduced construction activity in the country.

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 rise reaching approximately $35-40/t, following the uptrend in UAE domestic scrap prices. Imported HMS (80:20) prices, CFR west coast India, remained upward throughout this week and reached $378-380/t, while UAE HMS (80:20) processed scrap prices remained at $341/t DAP.

UAE rebar market update

Rebar demand in the UAE has improved, driven by increased construction activity, with consumption estimates ranging from 275,000 to 300,000 t. Emirates Steel is a key supplier, estimating bookings of 168,000 t, while second-tier producers account for around 75,000-80,000 t, and Omani producers have sold up to 60,000 t. Recent price negotiations between mills and traders have seen increases of AED 20-25/t ($5-7/t), with deals largely settling between AED 2,150-2,180/t ($585-593/t) delivered with 90-day letters of credit (LC).

Emirates Steel has restarted its rolling mill, previously idle for a year, to capitalise on market opportunities. With a rebar capacity of 400,000 t, the company aims to sell approximately 170,000 t/ month in the UAE and plans to increase its regional presence, particularly in Oman, targetting 25,000 t by early next year. This strategy aligns with anticipated regulatory changes, including the Emirates Conformity Assessment Scheme set for late 2024.

Outlook

Industry experts anticipate that domestic ferrous scrap prices will remain firm, driven by stronger rebar demand and active scrap purchases from major mills. Additionally, moderate inquiries from South Asian countries, particularly India, are expected to intensify pressure on suppliers to meet rising demand.