UAE: Domestic scrap index remains stable w-o-w; major mill maintains rebar offers amid moderate steel demand

The UAE's domestic scrap index remains largely stable w-o-w with minor fluctuations in the mid-week amid limited inquiries from mills and comparatively better export inquiries from Asian countries like Pakistan and India.

As per a major trading house, there is a noticeable gap between mill prices and market prices for scrap in the UAE. For HMS processed, the mill price is AED 1,345/t, while the market price ranges from AED 1,320 to AED 1,330/t, creating a gap of AED 15-25/t. For shredded scrap, the mill price is AED 1,450/t, compared to a market price of AED 1,430/t, resulting in a gap of AED 20/t. This disparity highlights sluggish domestic demand and suggests that while mills are maintaining higher prices, the market is exerting downward pressure. The soft market conditions and low activity levels are contributing to this gap, reflecting a cautious sentiment among buyers and sellers.

As per BigMint's market survey for Week 30, the trade volume was around 6,000 tonnes (t), comprising both HMS (80:20) processed and shredded scrap. Specifically, 2,000-3,000 t of shredded scrap were sold at AED 1,430-1,450/t, while approximately 3,000 t of HMS (80:20) processed scrap were sold at AED 1,330-1,350/t on a DAP Abu Dhabi basis.

In the current market, workable levels are as follows: HMS processed is trading at AED 1,330-1,350/t, shredded scrap at AED 1,410-1,430/t, and HMS and PNS mix at AED 1,350-1,370/t.

As per market insiders, some UAE-shredded scrap is of lower quality compared to European and American products. Poor-quality shredded scrap is priced at AED 1,310/t in the UAE market. Major mills prefer light and filtered shredded scrap due to its better yield. Shredded scrap from other sources or market players is seeing limited demand.

Emirates Steel has maintained its rebar offers for August deliveries, with prices unchanged at approximately $645/t exw (AED 2,369/t), according to sources informed by BigMint. The decision to keep offers steady comes in response to lukewarm demand in both domestic and export markets.

UAE wire rod suppliers are working to maintain prices amid a challenging environment. Aggressive pricing from foreign sellers, particularly Chinese suppliers, is intensifying market competition. Prices of local wire rods from non-benchmark mills range from $560 to $565/t CPT, depending on quantity and payment terms.

Producers are competing fiercely for market share by undercutting benchmark mill prices. However, with raw material costs rising, there is potential for price increases. Emirates Steel Arkan, a key local supplier, is using a customised approach to maintain a 70-75% market share, as announced at the start of the working week.

Regional products from Oman are priced at $575-580/t CPT, but local participants expect deals to be lower. Iranian wire rod is available at around $570/t CPT, though its viability is questioned due to sanctions. Chinese mills are increasing their presence in the UAE market, with average offers of $5-10/t below the current range, which some customers find promising, while others view the competition as disruptive.

Outlook: UAE steel producers are optimistic about a price increase next month. As per market insiders project activity ramps up in the second half of the year. Scrap prices are going to rise in both domestic and export sectors, though they haven't hit their peak for the year yet, the upward trend continues.