UAE Steel Traders Hit By Price Rise

Hike May Hit Dubai Construction Industry

Steel traders in the United Arab Emirates are said to have been hit by the upturn in steel prices.

The regional financial newspaper, Emirates Business, claims that steel traders are being forced to buy steel at high prices and sell it at lower prices to honour contracts made a year ago, when steel prices were much lower and based on lower iron ore input costs.

The newspaper quotes Rizwan Sajan, Chairman of Danube Building Materials, as saying the steel price has gone up by almost 30 per cent across the Gulf Co-operation Council (GCC) states over the last couple of weeks. The price for a tonne of steel is Dh3,000 in the UAE, RO320 per tonne in Oman and BD300 per tonne in Bahrain.
"This sudden, unexpected price hike is a further blow to steel traders. On one hand, we have orders from customers at very low rates while on the other, our present procurement rates from steel mills abroad are high. We are taking positions at $720 (Dh2,644) per tonne and we are not sure what domestic steel prices will be when these orders eventually arrive here," he said.

"Most players in GCC steel markets – the steel mills, traders and the end users – have been caught on the wrong foot as they failed to anticipate that steel prices would gain momentum in this fashion. Since domestic demand was weak, people were under the impression that there was no scope for a surge in steel prices."
After the UAE was hit last year by the fallout from the global financial crisis the domestic steel price in the Emirates is lower than in other Middle Eastern countries such as Syria, Iran, Libya and Egypt.. In the short-term, the high international steel price will adversely affect local contractors, who are trying to recover after the Dubai World debt settlement.

Although Mr Sajan expects a price correction in due course he says it is impossible to predict by how much. All players in the steel supply chain were working on minimum stocks and there is a shortage in the market.

ENRC In $300 Million Zambian Takeover

Kazakh miner ENRC has paid $300 million to buy Dutch company Enya Holdings. Enya has a 9-% stake in the Chambishi copper and cobalt processing plant in Zambia. ENRC said in a statement on Thursday it hoped to cut costs by using the Chambishi plant in Zambia to process copper and cobalt produced in the Democratic Republic of Congo from a mine which the company bought last year.

The deal is being financed entirely from the company’s own cash resources.

"The acquisition of Chambishi accelerates the group's expansion in copper and cobalt and at a lower cost than would be required for new investment," said Mehmet Dalman, independent non-executive director. "The integrated copper and cobalt mining and smelting businesses of Chambishi and those in the DRC, when combined, should have an improved cost position over time."

ENRC plans to invest $80 million in Chambishi by 2011 to upgrade its facilities, which will boost annual capacity to 55,000 tonnes of copper cathode, more than twice its current level of 25,000 tonnes. The combined operation is expected to produce 130,000 tonnes of copper cathode a year and 12,000 tonnes of cobalt-contained metal salts and concentrates by 2012. The company said that building Chambishi’s facilities from scratch would take at least three years and would have cost more than it is paying for Enya.

Enya also owns 100% of Comit Resources FZE, a Dubai-based marketing and sales company that handles Chambishi's copper and cobalt sales.

Last September, ENRC bought Central African Mining and Exploration in a $955 million cash deal which diversified the firm into metals such as copper and into high-risk areas of Africa.

Abu Dhabi Steel Prices Fall Seven To 17 Per Cent

There has been an overall drop in prices of steel products in Abu Dhabi, even as a surge in Chinese steel demand has pushed global output close to what it was before the economic crisis.

Prices have dropped between seven and 17 per cent compared to October 13.

According to figures released by the Statistics Centre - Abu Dhabi (Scad), prices of flat steel went down by 11 per cent, falling by almost Dh300 per tonne. The price of flat steel from Turkey dropped to Dh2,300 per tonne from Dh2,600 on October 13.

Meanwhile, rebar prices dropped between seven and 12 per cent during the past 10 days. The cost of six to eight mm rebar from Turkey dropped by seven per cent and fell by Dh175. It is now priced at Dh2,125 per tonne compared to Dh2,300 during the second week of October.

Similarly 10-32mm rebar from Turkey and the UAE dropped by 12 per cent to Dh287, falling to Dh1,962 per tonne compared to Dh2250 on October 13. Qatari rebar, however, increased by eight per cent, going up to Dh2,450 per tonne from Dh2,250 on October 13. Speaking to Emirates Business, Karel Costenoble of Mesteel, an online portal providing information on steel products, said prices of flat products have already bottomed out and a correction is imminent.

"Prices of hot rolled coil was priced at about $510 to $520 per tonne CFR Dubai, whereas it will be moving up by $20 to $25 per tonne," said Costenoble.

According to him, prices of beams have slightly reduced. The price of a tonne of UB/UC from South Korea, South Africa and India has come down from $660 (Dh2,423) a few weeks back to $610 to $620 CFR Dubai.

He said prices of rebar from Turkey is holding with Turkish bars hovering near $475 per tonne CFR Dubai.

"The slide in prices of Chinese products will come to an end soon. We might see an increase in prices of Chinese steel products by about $20 to $25 per tonne. However, there are no signs of a drop in production," he said.

According to reports, the price fall in China is a result of capacity expansion.

Reports quoting China Iron and Steel Association (Cisa) said steel prices kept falling in September due to fast capacity expansion, which further exacerbated market supply glut.

A report in Mysteel.net said the steel association expected the market will level off though it still relies on the degree of capacity expansion.

According to the latest figures released by the National Statistics Bureau, crude steel output in September stood at 50.71 million tonnes up by 28.7 per cent year on year, and the second high this year.

Daily output in the month hit an all-time high at 1.69 million tonnes. Steel stocks in major cities also kept rallying and total stocks up 2.74 per cent by the end of September, approaching this year's record. As to futures market, Cisa said there will be slim space for further steel price declines in view of the slumping profit at steel mills.

Profit at large and medium-size steel mills dived 77.65 per cent on year in the first nine months.

Similarly, according to statistics by the World Steel Association, an increase in the Chinese steel production and demand has pushed global output close to what it was before the economic crisis.

World crude steel production for the 66 countries reporting to the association was 107 million metric tonnes (mmt) in September. This is just 0.6 per cent lower than September 2008. The world total crude steel production month-on-month has continued to show a steady increase since April.

China's crude steel production for September was 50.7 mmt, 28.7 per cent higher than September 2008.

Elsewhere in Asia, Japan produced 8.3 mmt of crude steel in September, down 18 per cent compared to the same month last year. South Korea had a decline of 2.4 per cent from September 2008, producing 4.4 mmt of crude steel in September 2009.

Turkey produced 2.1 mmt of crude steel in September, 1.8 per cent down from September last year.

In the EU, Germany's crude steel production was 3.2 mmt in September 2009, a decrease of 21.7 per cent from September 2008. France produced 1.3 mmt in September 2009, down by 15.3 per cent from September 2008. The US produced 5.4 mmt of crude steel in September, a decrease of 31.4 per cent compared to the same month last year.

In the Middle East, Iran produced 0.9 mmt of crude steel in August 2009, four per cent more than in September 2008. Total crude steel production in the 66 reporting countries for the first nine months of 2009 was 866 mmt down by 16.4 per cent over the same period of 2008.

Source: Emirates Business

Rebar Prices Rise In UAE

Rebar prices in the UAE continued to increase, as domestic prices remained above $530 per tonne. Import prices, especially from Turkey, have also been going up compared to last week.

Turkish firms are booking rebar to UAE customers at $520 per tonne compared to $515 during the second week of August, a representative of a leading trading company told Emirates Business.

However, demand for steel continues to remain low within the UAE, and especially in Dubai, as many construction projects that have been cancelled or put on hold are yet to take off.

Traders yesterday said that the main reason for the rise in prices is the increase in the cost of scrap and billets.

According to Ajay Aggarwal, CEO of RAK Steel, local prices of steel continue to remain strong and would remain so for some time to come. "Right now we have been selling at $530 per tonne. The demand continues to remain the same as before, and it has not increased much," said Aggarwal.

Meanwhile, according to Karel Costenoble of Mesteel, demand in the UAE in general has been low and will continue to be so during the coming weeks. "Especially now that it is Ramadan, it is going to be a period of low activity. The market is not expecting any spurt in demand soon," said Costenoble.

"In the GCC, however, the market in Saudi and Qatar is a bit better but otherwise the regional market is low as many as projects are either shelved or postponed," he said.

According to him, the increase in Turkish rebar prices is mainly due to increase in the prices of scrap and billets. "We are not sure for how long the prices will continue to increase," he said.

According to a Metal Biz report, small steel mills in Turkey had to increase the imported price of steel scrap due to the strong demand in Far East area, in a bid to compete with the foreign buyers and ensure production.

The mix heavy scrap for September delivery lifted import prices from last week's $300 and $305 per tonne to $310 and $315 per tonne, with an increase of $15 per tonne. The shred scrap settled price increased to between $315 and $320 per tonne from $305 and $310 per tonne last week.

The price rise of steel scrap did not prevent Turkish small steel mills to import from the US and Europe. Turkish steelmakers also said the consumption of blast furnace steel scrap increased 10 per cent to 18 per cent. Previously, Turkey expected to repurchase after the price dropped and predicted it would decrease to $250 per tonne but rates showed an upward tendency.

Affected by the price rise of scrap steel, Turkish mills were forced to increase the price of square billets and long products. The square billet price rose to between $450 and $460 per tonne from last week's $440 and $450 per tonne. Rebar export prices increased by $20 per tonne to between $500 and $510 per tonne from $490 per tonne last week. The offer has even reached $520 per tonne but deals are yet to be concluded, said the report.

Meanwhile, according to Costenoble, prices of structural steel remains stable. "Beams are priced at around $650 to $700 per tonne," he added.

And Chinese prices are starting to come down for certain products, he said. "They had gone out of competition as the prices went up and although it has still not become competitive, prices are slowly going down showing signs that prices will soon fall further," he said.

"Some of it has become competitive though. The i-beams are priced at $630 per tonne coming down from $680 per tonne two weeks ago. Therefore they have definitely become competitive. Similarly the price of channels is now below $600," he added.

But when it comes to rebars, the Chinese are not yet competitive, said Costenoble. "Anybody who buys Chinese steel would expect it to be about $40 to $50 cheaper compared to Turkish or other steel products," he said.

Meanwhile, crude steel production for the 66 countries reporting to the World Steel Association (Worldsteel) in Brussels, was 103.9 million metric tonnes in July, marking the highest monthly production figure this year.

The July total jumped by more than four million metric tonnes compared to June production. However, compared to July 2008, the world's steel production was 11 per cent lower in July 2009. In June, global steel output reached 99.8 million tonnes, up from May's production of 95.6 million tonnes.

In July, almost all the major steel producing nations – including China, Japan, Germany, the United States, Brazil, Turkey, Russia and Ukraine – reported their highest monthly figures so far in 2009.

Total crude steel production in the reporting countries for the first seven months of 2009 was 653 million metric tonnes, a 20 per cent decrease over the same period in 2008.

The Middle East's production increased from 1.3 million tonnes in June 2009 to 1.432 million tonnes in July. Compared year-on- year, July's production in the region where data was collected (Iran, Qatar and Saudi Arabia), the production went up by about 2.5 per cent. The three countries put together produced about 1.27 million tonnes of steel in July 2008.

During the first seven months of 2009, the three countries in the region produced about 9.67 million tonnes of steel compared to 9.615 million tonnes of steel during the same period last year, registering a 0.6 per cent increase.

China's crude steel production for July 2009 was 50.7 million metric tonnes, 12.6 per cent higher than July 2008. It is the first time ever that China produced more than 50 million tonnes of crude steel in a month, accounting for almost 50 per cent of world crude steel production. Since April 2009, China's crude steel production has shown a steady month-on-month increase.

Elsewhere in Asia, Japan produced 7.7 million metric tonnes of crude steel in July 2009, down by -24.9 per cent compared to the same month last year. South Korea showed a decline of -13.3 per cent from July 2008, producing four million tonnes of crude steel in July 2009.

In the EU, Germany's crude steel production was 2.7 million metric tonnes in July 2009, a decrease of -28.8 per cent from July 2008. The UK produced 0.8 million tonnes in July 2009.

Source: Emirates Business

Abu Dhabi Steel Prices Fall

Prices of building materials witnessed a noticeable decline in Abu Dhabi during December 2008 compared to November, according to a report from the Abu Dhabi Statistics Centre.

Steel prices fell by 38 per cent in December compared to 20 per cent in November.

Prices of building materials, especially steel, are continuing to fall in the UAE. In some categories of steel products, prices in the UAE fell by 10 to 38 per cent during the last quarter of 2008, the report said.

The continuing drop in steel prices is attributed to the increasing reliance on imported Chinese steel and the drop in local demand.

According to the price index by the centre, the prices of steel rods of diameters ranging between 10mm and 32mm fell by 38 per cent last month. Prices of Chinese steel fell by 20 per cent, while that of Turkish steel dropped by 10 per cent.

Source: Gulf News