UAE ferrous scrap index rebounds from 10-month lows on holiday restocking

• Scrap prices rebound on restocking demand
  
  
• Export market slows as year-end approaches
  
  

The UAE's domestic ferrous scrap index rebounded this week after reaching a 10-month low, with prices increasing by AED 28/tonne (t) ($8/t) w-o-w. This rise in prices was driven by improved demand, as domestic mills actively sourced material ahead of the year-end holidays.

BigMint's benchmark assessment for HMS (80:20) processed scrap rose to AED 1,220-1,223/t ($332-333/t), up from AED 1,190-1,195/t ($324-325/t) the previous week.

Additionally, the offer levels for shredded scrap were heard at AED 1,300-1,320/t ($353-359/t), DAP Abu Dhabi.

The current workable levels for HMS processed stands at AED 1,215-1,220/t ($330-332/t), while for shredded the levels stand at around AED 1260-1270/t ($343-345/t).

In BigMint's week 51 market survey, improved trade activity was observed, with approximately 5,000 t of HMS processed heard traded at AED 1,220-1,225/t ($332-333/t), while trade activities for shredded material remained slow with only a few major mills procuring small volumes.

A trader source added, "UAE HMS processed prices have seen a slight increase this week compared to last week, driven by restocking ahead of the holidays. Additionally, Turkiye's prices rebounded after hitting a two-year low, which also had a minor effect on the rise in UAE domestic scrap levels. However, the Turkiye factor does not always influence the UAE domestic market."

UAE Central Bank cuts interest rates following US Fed's decision

The UAE Central Bank cut its benchmark interest rate by 25 basis points to 4.40%, aligning with the US Federal Reserve's recent rate reduction to stimulate economic activity. This move reflects the UAE's response to easing inflationary pressures and signals continued economic growth. The UAE's economy is projected to expand by 4% this year, driven by diversification efforts, while inflation forecasts for 2024 have been slightly revised down to 2.2%. Gulf central banks, including Saudi Arabia and Qatar, also followed the Fed's rate cut.

Export market

This week, the export market was moderately active, with a few deals reported for Bangladesh. However, as the year-end approaches, activity is expected to slow down, and offers from UAE suppliers will close for the year.

Shredded scrap is being offered at $395-398/t CFR Qasim from the UAE. However, due to the challenging market conditions, even these price levels are hard to justify for mills operating at significantly reduced capacity.

In Bangladesh, approximately 800 t of HMS mix and PNS (Dubai origin) were recently booked at $385/t CFR Chattogram, while 800 t of Heavy PNS Fabrication (Dubai origin) were booked at $400/t CFR. The market continues to show average activity, with domestic demand remaining at moderate levels.

HMS (80:20) spread

The average spread between CFR Nhava Sheva HMS (80:20) from Europe and UAE local HMS (80:20) processed scrap decreased to approximately $25-30/t. Imported HMS prices for CFR west coast India stood at $360-365/t, while UAE processed HMS offers gained to $332-333/t DAP.

UAE steel market updates

Rebar market: Sources reported moderate demand in the UAE with stable rebar prices. Emsteel was selling at AED 2,400-2,430/t ($653-661/t) and re-rollers at AED 2,250-2,300/t, unchanged from the previous week. Imported billet prices increased slightly following a deal with Iran, priced at $496/t CFR UAE.

HRC market: UAE buyers are refraining from importing HRC following recent major trade activities. After making substantial purchases from Japan and India, they now have sufficient stock and stable demand, prompting them to stay passive on new imports while closely monitoring market developments.

Sources indicate that Emirati buyers have recently secured approximately 20,000-25,000 t of HRC from India and around 30,000-35,000 t from Japan.

With their inventory levels in place, UAE buyers are taking a "wait and watch" stance. As the global Christmas and New Year holidays approach, market sentiment is expected to remain muted.

Outlook: Market activity is expected to slow down next week, with some mills continuing restocking material this week in preparation for the year-end holidays. There will likely be limited buying during Christmas week, with mills operating with fewer staff, leading to reduced activity.