UAE: Domestic scrap prices drop by over $20/t w-o-w; market awaits ESA rebar price announcement

• UAE scrap and rebar markets face price declines and uncertainty.
  
  
• Market awaits Emirates Steel Arkan's price announcement.
  
  

This week, domestic scrap prices in the UAE dropped sharply by $21/tonne (AED 76-80/t) amid a cautious approach from steelmakers. As per buyer sources, HMS sheared interested price levels are at AED 1,230-1,250/t, shredded at AED 1,340-1,350/t, and HMS super at AED 1,210-1220/t DAP Abu Dhabi. Mill-delivered prices are at AED 1,400-1410/t for shredded and AED 1,280-1290/t for sheared/processed HMS.

"We're eagerly awaiting Arkan's price announcement this month and expect a reduction," a trader commented. "However, billet availability is currently low in the mills. I recently sold 300 t of fabrication at AED 1,290/t DAP. The market is under pressure, and buyers are holding off. Workable levels have dropped to AED 1,240-1,250/t for processed HMS and AED 1,300-1,350/t for PNS and shredded DAP."

According to a domestic scrap supplier, there is an anticipation of a decline in rebar prices in the near future. Emirates is expected to lower its prices soon, influenced by current market sentiments. Currently, scrap offers in the market are as follows: HMS is priced at AED 1250-1270/t, and shredded scrap is priced at AED 1380-1400/t DAP.

BigMint's bi-weekly assessment showed an AED 76/t ($21/t) decline for HMS (80:20) processed grade, which maintained a price range of AED 1,255-1260/t ($342-343/t) DAP.

According to a source from the mill, Emirates Steel Arkan currently has a substantial stockpile and has paused its buying activities. This has created panic in the UAE market, leading to a price drop of around AED 60-70/t. Domestic scrap prices are also under pressure, as major mills, having sufficient inventory, are reluctant to procure at high prices.

HMS spread: The average spread between the CFR Nhava Sheva HMS (80:20) and UAE local HMS (80:20) processed scrap increased to $58-60/t, following the comparatively downward trend in domestic HMS (80:20) processed price in UAE. Imported HMS (80:20) prices (CFR west coast India) hovered at $400-402/t, while UAE HMS (80:20) processed prices were at $342-343/t DAP.

"Prices are volatile at the moment," noted a supplier in Sharjah. "Buyers are holding back on material inquiries, and we're anticipating developments next week."

Rebar market updates:

The UAE rebar market is awaiting Emirates Steel Arkan's June price announcement. Currently, the mill has rolled over net prices from May without disclosing specific figures, causing some uncertainty.

In May, Emirates Steel Arkan quoted rebar prices at AED 2,744/t ($747/t) CPT Abu Dhabi and AED 2,751/t ($749/t) CPT Dubai, Sharjah, and the northern Emirates. Prices exclude a 5% VAT.

A source explained that prices vary based on volumes under memorandums of understanding and spot purchases. This approach aims to stabilise the market.

A market participant added, "It may seem like prices have decreased, but there's no real change as all incentives and special terms have been removed."

Market uncertainty for the rebar price disparity: The UAE rebar market was uncertain due to low prices from a steel mill from the SE region, a sanctioned company, raising concerns about unfair competition and profit loss. Aggressive pricing by certain re-rollers has been a major issue, with UAE rebar being offered to local trading companies at highly competitive rates.

A reliable source informed that further discount of over AED 60-80/t could destabilise the market. However, some UAE steelmakers believe the impact will be limited due to their smaller market share.

As per market insiders, many participants avoid opening letters of credit (LCs) with the steel mill amid issues with low prices. Major traders are cautious and have preferred other companies.

Outlook: The scrap market in the UAE is poised for a rebound, with expectations of increased procurement by steel mills. Demand for rebar and other steel products is anticipated to pick up following a sluggish period in the construction sector.