The steel market in the United Arab Emirates is currently navigating a challenging phase, primarily driven by the pressure exerted on billet prices due to sluggish sales in the construction steel sector.
The recent introduction of discounted prices for construction steel by steel factories has disrupted the market dynamics, resulting in other construction steel suppliers being limited to selling only 60-70% of their monthly volumes in the local market. This week, billet producers have strategically set a target price of $525/t by progressively reducing domestic market prices by $5-10 on a monthly basis.
Simultaneously, the offer for Oman-origin billet for November delivery was positioned at $525/t. The 150mm 3sp billet of Iran origin was transacted at $465-470/t FOB. However, cfr prices have experienced an upswing, reaching $495-500/t CFR UAE ports, influenced by the escalation in sea insurance premiums associated with recent events in Gaza. The intricacies within the steel market are further compounded by a significant surge in local scrap offers in the UAE.
Despite the scrap export ban in the UAE, the escalating export of scrap to Bangladesh and Pakistan through Bahrain is propelling scrap prices upward. Producers have responded by elevating scrap purchase prices, reaching AED 1,225/t (334$) for sheared, AED 1,275/t ($347) for premium (PNS), and AED 1,325/t (361$) for shredded. Scrap prices were stipulated at AED 1,110-1,130/t (305-308 $) for HMS 80:20 grade and AED 1,200-1,230/t (327-335 $) EXW. The anticipated price increases next week inject an element of uncertainty into the dynamics of the steel market.
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