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UAE: Ferrous scrap index gains $3/t w-o-w; export market remains moderately active

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Melting Scrap

BigMint Bureau

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16 Aug 2024, 19:53 IST

UAE: Ferrous scrap index gains $3/t w-o-w; export market remains moderately active

The UAE domestic scrap index rose by AED 9/t ($3/t) w-o-w, reflecting a slight improvement in domestic demand. However, construction activity remains sluggish and demand from key scrap-importing countries remained moderate. Domestic scrap demand is currently limited, with only essential purchases occurring, and major mills actively sourcing material.

According to BigMint's bi-weekly assessment, market prices for scrap are between AED 1,310-1,315/t DAP Abu Dhabi.

Buyers' bids for processed HMS are around AED 1,300 to AED 1,310/t, while offers are at AED 1,320/t.

A representative from a major trading house said, " Current mill offers are AED 1,320-1,330/t for processed HMS and AED 1,440/t for shredded scrap. However, buyers are hesitant to deal at these levels, and the UAE domestic steel market is experiencing slight volatility. "

Another major mill supplier observed that the market has remained relatively stable w-o-w, with some fluctuations seen in the middle of the week.

Trade sources indicate that shredded scrap is currently unpopular in the UAE due to its lower yield and often poor quality, as it is frequently mixed with sand. Unlike in Europe or the US, where shredded scrap is preferred, it has not been well received in the UAE market.

As per BigMint's survey for week 33, the trade volume was at around 2,000-3,000 t, comprising HMS (80:20) processed scrap was sold at AED 1,300-1,310/t, DAP Abu Dhabi.

HMS spread: The average spread between CFR Nhava Sheva HMS (80:20) and UAE local HMS (80:20) processed scrap prices decreased to $20-25/t following the comparatively upward trend in domestic HMS (80:20) processed price in the UAE. Imported HMS (80:20) prices (CFR west coast India) hovered at $380-385/t, while UAE HMS (80:20) processed prices were at $357-360/t DAP.

Export activities this week have been moderate. Suppliers are reported to have resumed offering to Bangladesh following the nationwide disturbance, with Bangladeshi buyers re-entering the market. HMS 1 is offered at $422-425/t, with bids at $415-420/t, while HMS1 + PNS Mix is offered at $425-426/t, with bids at $420/t. The current offer levels for shredded scrap from the UAE to Pakistan are $425-428/t.

Additionally, a deal was reported for UAE-origin PNS and HMS mix at $416/t, concluded last weekend for October-end shipment to Bangladesh.

Emirates Steel Arkan reported AED 3.96 billion in H1 2024 revenues, down 10% from H1 2023. Despite tough market conditions, the group maintained stable performance with an AED 503 million EBITDA. The steel division earned AED 3.60 billion in revenue and AED 140 million in profit, while building materials brought in AED 353 million and AED 51 million, respectively.

Outlook

Domestic ferrous scrap prices are likely to remain range-bound in the near term. Export activities are likely to remain stable with better inquiries from Pakistan and Bangladesh amid a softening global ferrous scrap price.