Rise in scrap value likely to lift rebar prices in UAE

Rebar prices in the UAE could go up in the coming days following an increase in the price of scrap, industry officials said yesterday.

The demand for steel in the country, however, remains soft as work on several projects continues to remain low key.

Rebar imported from Turkey was yesterday priced at $495 per tonne CFR Dubai.

Karel Costenoble, Manager at Mesteel, speaking to Emirates Business said the main reason for the increase will be the rise in the prices of scrap.

"In fact, the prices have been marginally increasing. While rebar was priced at $475 per tonne a couple of weeks ago, it has now increased to $495 per tonne. Very soon, we might witness a further increase," he said.

According to agency reports, steel billet prices in the Black Sea region rose this week due to firmer scrap and iron ore prices. Black Sea free-on-board (fob) billet was quoted between $420-$430 a tonne, up from about $415 last week while scrap rose to $320 from about $300. One trader said he shipped scrap from $318 a tonne in Turkey. "Scrap dealers are pushing the scrap price higher," said a steel merchant in Turkey.

"There's not much material around as we go into winter, so people are keen to buy now rather than later," he said.

Ajay Aggarwal, CEO of RAK Steel, had earlier told that a price increase locally was inevitable.

"The demand remains the same. However, local manufacturers have to make some profit and it is bound to reflect in the pricing strategy," he said. Meanwhile, the prices of universal beams and columns have also moved up from $580 per tonne to $600 per tonne. Japanese beams are priced at $540 per tonne CFR Dubai, said Costenoble.

According to him, steel prices in China have also been moving up during the past few days. "It has been moving up fast, increasing by about $40 to $50 per tonne. The increase in the prices of steel beams from China will act as an impetus to steel from other markets. The offer prices from other sources might go up as well," he said.

Hot-rolled coil from China, which was priced at about $570 per tonne, has increased to about $600 per tonne CFR Dubai.

China has also reduced its production of late due to lower demand. According to Bloomberg – which cited data released by the National Bureau of Statistics – official November Chinese average daily crude steel production came in at 1.58 million tonnes per day (mtpd), a 5.4 per cent decline compared to October's 1.67 mtpd. Total November crude steel production came in at 47.3mt. China, however, continued to produce in high volumes. Steel exports in November rose six per cent to 2.87mt and are a whopping 115 per cent higher than the lows in May.

The demand, according to analysts, is mainly coming from Asia and Turkey, where domestic demand is quite healthy apart from some interest from North Africa.

"The demand in the UAE, however, continues to remain low. People are not in a mood to buy more. Also traders from China are reluctant to sell to the UAE for deferred payments. Until recently, traders were accepting letter of credit for deferred payments. The system has changed and new practices are being developed," said Costenoble.

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