UAE steel prices continue to move south
Steel prices in the UAE fell further to between Dh2,400 and Dh2,500 per metric tonne in the first week of June from the highs of Dh3,000 per tonne in April, industry sources said.
However, they are still above the low range of between Dh1,950 and Dh2,250 per tonne around mid-March, according to an earlier survey done by this newspaper.
While the international steel market, which is dependent on iron ore, has seen volatility with the shift in iron ore contracts from annual to quarterly, the UAE predominantly imports Turkish steel, which uses scrap and the latter's prices are falling, analysts said.
"Prices have been volatile and I wish anyone could forecast what will happen. It will take some time for the market to get used to the new methods of pricing in iron ore," Ajay Aggarwal, CEO, RAK Steel, told Emirates Business yesterday. "It is very difficult to say where market will head. [Current] prices for rebar stand at Dh2,500."
The market is moving southwards, said Danube Group Chairman Rizwan Sajan. "Import prices have come down to Dh2,400 and the scrap prices are dropping since the past four weeks. If people are successful in raising iron ore prices, then the market will turn around in terms of steel prices, and scrap prices will also go up in tandem. Since Turkish steel goes the scrap route instead of the iron ore route, their prices have come down from Dh2,700 to Dh2,400."
According to agencies, global majors Rio Tinto and BHP Billiton notified Japan's steelmakers on March 7 that they want to raise iron ore prices by 22-23 per cent in July-September from the previous quarter, a source said, sending shares of Japanese mills to lows for the year.
The price hike, the second consecutive quarterly increase, would make the July-September iron ore price more than double the price for the 2009 financial year, and follows Japanese steelmakers' agreement with BHP to raise the coking coal price for the quarter by 75 per cent from a year earlier, said a Reuters report.
Brazil's Vale SA, the world's biggest iron ore producer, said this month it had already set contract iron ore prices for the quarter and offered them to its customers.
"People still prefer Turkish steel in the UAE since local companies cannot match their price.
Meanwhile, Turkey does not have a high internal rate of consumption and so are forced to export. Due to a low cost of production in Turkey, they can sell at low price," said Sasikumar Moorkanat, GM, Union Steel Mills.
"On the international front, iron ore prices went up and came down since China is in a position to protect the prices [it produces seven times of what India does]. In this market, very little steel is made from iron ore and so many look at scrap prices instead."