UAE: Domestic scrap prices rise by $3/t w-o-w; uncertain steel market slows scrap trades

• The UAE steel sector faces uncertainty amid current challenges.
  
  
• Emirates Steel Arkan leads DRI-focused expansion for green steel production.
  
  
• The UAE wire rod market adjusts to oversupply with customised negotiations amid subdued demand.
  
  

This week, domestic scrap prices in the UAE rose by $3-4/tonne (AED 10-15/t) amidst uncertain rebar market conditions, influenced by a slow recovery and seasonal impacts on the steel sector.

The UAE rebar market faces uncertainty due to a new flexible pricing policy by the benchmark mill, compounded by seasonal effects. Rebar consumption is gradually recovering but remains below anticipated levels of 220,000-230,000 tonnes. Despite nominal adjustments, actual transaction prices have seen minimal change from the previous month, averaging around AED 2,200/t ($599/t) for non-Emirates Steel Arkan origin. Hamriyah Steel offers are at AED 2,160/t ($588/t) delivered, with post-Eid holiday demand expected to revive.

A representative from a major trading house informed, "Current mill prices for HMS processed are at AED 1,375/t and shredded at AED 1,475/t. However, buyers are reluctant at these levels. The UAE domestic steel market is experiencing slight volatility, and trade activities remain sluggish."

Another major mill supplier noted that the market has maintained stability, with HMS processed at AED 1,300-1,350/t and shredded at AED 1,450-1,475/t. Demand in the domestic market remains subdued, leading to relatively low trade activities. Some price fluctuations are observed mid-week.

BigMint's bi-weekly assessment indicated an increase of AED 11-12/t ($3/t) for HMS (80:20) processed, maintaining a price range of AED 1,335-1,340/t ($363-365/t) DAP.

Buyers express reluctance at current prices, with HMS processed quoted at AED 1,375/t and shredded at AED 1,475/t. The UAE domestic steel market shows slight volatility, with sluggish trade activities noted.

Market survey: According to BigMint's week 23 market survey, shredded scrap bids and workable prices ranged from AED 1,400-1,420/t ($389-392/t), while HMS (80:20) processed was assessed at AED 1,300-1,320/t ($362-368/t) DAP Abu Dhabi.

As per market participants, around 3,000-4,000 t of HMS processed (sheared) were at AED 1370-1390/t, DAP and 2,000 t of shredded scrap at AED 1450-1470/t, DAP.

HMS spread: The average spread between the CFR Nhava Sheva HMS (80:20) and UAE local HMS (80:20) processed scrap decreased to $33-35/t, following the comparatively upward trend in domestic HMS (80:20) processed price in UAE. Imported HMS (80:20) prices (CFR west coast India) hovered at $395-400/t, while UAE HMS (80:20) processed prices were at $363-365/t DAP.

Export activities are projected to drive up prices by approximately AED 50/t this week. According to BigMint's market survey, shredded scrap bids range from AED 1,400-1,420/t ($389-392/t), while HMS (80:20) processed is assessed at AED 1,300-1,320/t ($362-368/t) DAP Abu Dhabi.

Emirates Steel Arkan progresses with a substantial capacity expansion focused on direct reduced iron (DRI), aiming for green steel production. Plans include a 7 million tpy pelletizing plant and a 2 million tpy DRI module in collaboration with Itochu Corporation and JFE Steel. Additionally, Emirates Steel Arkan plans to enter the flat steel segment with a new Electric Arc Furnace (EAF)-based steelmaking complex capable of producing 2.5 million tpy of slabs.

In response to low demand and oversupply, the UAE wire rod market adapts with customized negotiations. Emirates Steel Arkan refrains from disclosing June prices, opting for flexible pricing strategies tailored to customer needs. Market levels for wire rod are estimated at $600-610/t delivered, with some deals reported below this range.

Outlook: The UAE scrap market is likely to remain range-bound driven by low demand in the rebar sector, export activities are expected to rise with better market activity in the near term.