UAE: Ferrous scrap prices down $5/t w-o-w; market cautious amid slow rebar sales

This week, domestic scrap prices in the UAE remained slightly lower as the steel market witnessed sluggish rebar sales from mills and scrap movement remained slow in the domestic market, with better export sales seen into Pakistan and Bangladesh.

As per market participants, the market is under pressure as local mills are facing challenges in rebar sales that have dragged down the domestic scrap market's interest in fresh bookings.

BigMint's bi-weekly assessment shows a decrease of AED 19/t ($5/t) for HMS (80:20) processed, with prices in a range of AED 1,320-1,325/t ($359-361/t) DAP Abu Dhabi.

According to an official with a major trading house, unprocessed HMS (80:20) was offered at AED 1,290-1,300/t while processed varieties were quoted at AED 1,330-1,335/t DAP.

Another mill source informed us that HMS (80:20) processed offered at AED 1340-1350/t but we quoted for AED 1310-1320/t levels, similarly for shredded we got an offer at AED 1440/t but the counter bid was at AED 1400-1410/t. This creates a gap between what sellers are asking and what buyers are willing to pay (bid-offer disparity).

BigMint's market survey for week 28 witnessed bookings of 7,000-8,000 tonnes (t) of ferrous scrap. These included 4,000-5,000 t of HMS (80:20) processed in the range of AED 1,340-1,350/t, and around 3,000 t of shredded at AED 1,460-1470/t DAP Abu Dhabi.

As per another source with a major trading house, the ferrous scrap market witnessed a largely stable trend, with prices for processed HMS (80:20) settling at AED 1,320-1,330/t DAP and shredded scrap at AED 1,420-1,430/t DAP. Steel mills are currently well-stocked and not actively pushing for new purchases.

HMS spread: The average spread between the CFR Nhava Sheva HMS (80:20) and UAE local HMS (80:20) processed scrap increased to $32-34/t following a decline in the latter. Imported HMS (80:20) prices (CFR west coast of India) hovered at $392-395/t, while UAE HMS (80:20) processed prices were at $359-360/t DAP.

In the export market, Bangladeshi buyers were getting offers from the UAE with workable levels of UAE-origin HMS and PNS mix prices heard at $428-430/t whereas HMS 1 offers were heard at $428-430/t with workable levels at $425-426/t CFR Chattogram.

Offers from the UAE to Qasim also continue to be there in the market as a few buyers are also opting for UAE material, showing better interest in PNS and HMS mix grade.

The UAE's wire rod market remained largely unchanged in July. Due to consumption challenges and a lack of buyer confidence, suppliers have adopted a soft pricing strategy. The benchmark mill's wire rod price is steady at $585/t CPT, similar to last month. Although there was an upward trend in the rebar sector, which raised expectations for wire rod prices, the market did not see stronger pricing. Deals for domestic products were heard at $575?585/t CPT, lower than the initial average price of over $600/t, which the market did not accept. The rebar sector appears more favourable, leading some traders to skip wire rod procurement. More flexible prices might be seen in future contracts.

Outlook: The UAE's scrap market is anticipated to remain range-bound due to limited interest from steel mills, driven by weak demand for rebar and other steel products. However, rising export activities might lead to short-term material scarcity if steel mills' demand increases.