UAE: Domestic scrap prices remain stable w-o-w; market outlook bearish amid Eid holidays

• The UAE steel sector remains slow before Eid
  
  
• Buyers showing less interest in firm domestic scrap offers
  
  

This week, the domestic scrap prices in the UAE remained stable with minor fluctuations amid slow-moving domestic and export markets influenced by Eid and weaker local steel demand. Indicative prices for the week in Abu Dhabi showed HMS (80:20) processed ranging between AED 1,340 to 1,355 /t DAP, while shredded scrap was offered at AED 1,460 to 1,480/t DAP. PNS was offered at AED 1,400/t DAP. Despite firm mill-delivered prices due to supply-demand dynamics exporters favoured India and Pakistan, as the domestic steel market has been sluggish.

A representative from a major trading house informed, "Just like other Asian countries in UAE, we anticipate a reduction in finished product prices in the coming months. Local mills are carefully considering their purchasing decisions. Workable price levels have decreased by AED 50/t since last week. Following Eid, the market is expected to decline, although supply will remain tight. Shredded offers in the market heard at AED 1,440-1450/t and HMS(80:20) processed offers were at AED 1350/t DAP Abu Dhabi."

Another major mill supplier noted that mill prices for HMS processed are currently at AED 1,370-1,375/t. Market price levels have decreased by AED 30/t, with offers for HMS processed at AED 1,335-1,345/t and shredded at AED 1,430-1,440/t.

BigMint's bi-weekly assessment indicated a range-bound trend for HMS (80:20) processed, maintaining a price range of AED 1,338-1,340/t ($364-365/t) DAP Abu Dhabi.

Buyers expressed reluctance at current prices, with HMS processed quoted at AED 1,320/t and shredded at AED 1,410/t.

Market survey: According to BigMint's week 24 market survey, approximately 500-750 t of unprocessed HMS were booked at AED 1,300/t DAP Abu Dhabi. Additionally, 800-1000 t of LMS were booked at AED 1,050/t DAP Abu Dhabi, reflecting a buyer-specific shift towards more LMS procurement while reducing purchases of processed HMS and shredded scrap recently.

HMS spread: The average spread between the CFR Nhava Sheva HMS (80:20) and UAE local HMS (80:20) processed scrap decreased to $32-33/t, following the comparatively stable trend in domestic HMS (80:20) processed price in UAE. Imported HMS (80:20) prices (CFR west coast India) hovered at $394-397/t, while UAE HMS (80:20) processed prices were at $364-365/t DAP.

Export activities: HMS from the UAE was offered at $415/t CFR Qasim. Market activity has been slow, with limited domestic and export movement. After the Eid holidays, we can expect better market participation in exports. Pakistan was active in pre-Eid stocking but has since slowed down its purchasing.

As per a Sharjah-based exporter, the recent freight rate for shipping from the UAE to Chattogram stood at $635-640/20ft container, and haven't encountered any issues along the route from the Middle East. Currently, export deals are in negotiation, with a tentative price range for a mix of HMS 1 and PNS from the UAE ranging between $415 and $420/t CFR Chattogram.

Offers for HMS 1 from Kuwait, Bahrain, and the UAE are in the range of $410-415/t, while bids are at $405-408/t.

NMDC Energy, a subsidiary of the National Marine Dredging Company (NMDC), is set to invest AED 367 million ($100 million) in a new production facility at Khalifa Economic Zone Abu Dhabi (KEZAD). This facility, covering 224,000 square meters, will specialise in modular fabrication, bolstering the UAE's industrial capacity.

The investment aligns with KEZAD's mission to advance the UAE's energy, logistics, and marine engineering sectors, supported by a 50-year lease agreement. NMDC Energy already operates advanced fabrication facilities in Abu Dhabi, capable of producing up to 100,000 tonnes (t) of structural steel annually.

Additionally, NMDC is expanding its footprint with a new 450,000-square-meter fabrication yard in Ras Al Khair Port, Saudi Arabia, expected to have a capacity of 60,000 t per year by 2026.

The establishment of this new facility underscores the UAE's ambition to strengthen its position as a global industrial powerhouse. Once operational, it will play a crucial role in meeting the diverse needs of the construction and oil and gas industries across the GCC region and beyond.

Outlook: The UAE scrap market is expected to remain slow due to low demand in the steel sector, especially with the upcoming Eid holidays next week.