UAE: Domestic ferrous scrap price movement remains slow w-o-w with nominal bookings

In the United Arab Emirates (UAE), scrap prices in the domestic market have witnessed a largely stable trend this week, with weak trade activities seen in the market. SteelMint's biweekly assessment showed an AED 5-8/tonne (t) slight uptick for HMS (80:20) processed scrap grade, maintaining a price range of AED 1,280-1,290/t ($349-351/t) DAP.

According to SteelMint's Week 51 market survey, a couple of deals were concluded by an Abu Dhabi-based mill. Around 500 t of fabrication scrap were booked at AED 1,390/t on a DAP Abu Dhabi basis.

Buyer and seller indications: On the other hand, a few sellers quoted AED 1,340-1350/t for PNS, AED 1300-1320/t for processed HMS (80:20), and AED 1,420-1440/t for shredded scrap on a DAP Abu Dhabi basis.

However, buying indications suggested that HMS super/unprocessed grade is valued at around AED 1,200-1,220/t, whereas processed HMS is observed in the range of AED 1,270-1,280/t.

According to a few traders and sellers, recent transactions include the sale of approximately 500 t of UAE-origin shredded scrap at $440/t, another 500 t at $433/t CFR Qasim, and small parcels worth 2000 t of shredded scrap sold at $436/t on a CFR Qasim basis from the last weekend to the present date. Additionally, about 120 t of HMS grade were sold at AED 1490/t ($405/t) on a CFR Chattogram basis.

HMS (80:20) spread: The average spread between CFR Nhava Sheva HMS (80:20) and UAE local HMS (80:20) processed scrap prices in the current week dropped to around $41-45/t, witnessing a slight narrowing trend amid a volatile price trend in domestic scrap prices. Imported HMS (80:20) prices into the Indian West Coast increased to around $390-394/t, while UAE HMS (80:20) processed-grade scrap prices remained at around $349-350/t DAP.

Emirates Steel, one of the leading steel producers in the UAE, has increased rebar offers by around $25/t (AED 92/t) m-o-m for January 2024 deliveries. Revised offers stood at $735/t exw (AED 2,699/t) compared to $710/t exw (AED 2,607/t) last month and $714/t CPT Dubai (AED 2,622/t). The improvement in demand owing to the higher activity in the construction sector has resulted in an increase in offers by the company.

GCC Steel Producer: Steel producers in GCC countries, including Saudi Arabia, Kuwait, and the United Arab Emirates, are temporarily halting their steel export offers due to Red Sea disruptions caused by recent attacks from Yemeni Houthi rebels. The Red Sea is a crucial shipping route for GCC steel exports, now deemed unsafe. This decision could instigate uncertainty in the global steel market, impacting prices.

Without viable alternative shipping routes, some countries may face steel shortages and price hikes. The delay in exports could lead to financial losses for GCC steel producers, with reduced revenue and potential contractual penalties.

While the security situation in the Red Sea remains precarious, GCC producers may resume exports if conditions improve. Exploring alternative shipping routes, such as around Africa or through the Suez Canal, could impact shipping costs and timelines.

Recently, around 180 vessels have either rerouted around Africa or halted, awaiting instructions to avoid Red Sea attacks. Ships diverted from the Suez Canal will experience delays of at least a week or two upon reaching ports.

Outlook: The UAE's domestic scrap market anticipates a price upswing in the upcoming week, driven by increased demand from domestic steelmakers and elevated prices in January's finished steel sales. The construction sector's improved activity is likely to contribute to this positive trend. However, material availability is expected to remain constrained due to heightened interest from other significant buyers like Pakistan for prompt shipments of UAE-origin scrap.