Emirates Business reported that prices of iron and steel are expected to remain at their current low levels following unprecedented hikes worldwide last year, which covered all Arab countries as well.
Dr Ahmed Mohammed Al Nuzhi Union adviser said that the union has made a study which concluded that the current prices in Arab countries are unfair, exceptional and temporary.
He expected prices to rise again though not with the same pattern of the last hike, once the world and China in particular, come out of the negative impacts of the global financial crisis, which is expected next year.
Mr Al Nuzhi spoke about the drop and rise in the prices of steel in Arab countries such as the UAE and Egypt before and after the global financial crisis broke out, saying the real reasons are not known by most Arabs.
He cited three main reasons: retreat in the values of the currencies of producers and exporters, drop in global demand and lack of raw materials in Arab countries.
He said that in the UAE, the price of steel jumped to AED 6,700 a tonne last year but has retreated to AED 1,800 now. Previously, it was stable at AED 3,000 for years. And in Egypt, it has gone down to EGP 3,000 now from a high of EGP 9,016 three months before the global crisis began.
Mr Al Nuzhi said that three of the main exporting countries pumped vast amounts of their steel into the Arab region, particular into the UAE and Egypt, because of the big construction projects underway in these two countries.
The UAE and Egypt import a large amount of their steel from Turkey, Ukraine and Russia. With the start of the global financial crisis in mid-September, those three countries were left with a huge reserve of steel as demand, especially from China, suddenly retreated.
They were prompted to devalue their currencies by 75%, 60% and 35% and exported steel at the new lowered prices in the light of the stability of currencies such as the UAE dirham and the Egyptian pound.
Turkey, Ukraine and Russia were able to push vast amounts of their steel reserve to the region. However, construction soon slowed down in the region as well and the two main steel consuming countries here the UAE and Egypt were left with vast amounts of steel stock, causing the fast retreat in prices.
Mr Al Nuzhi said that the fallout of the global financial crisis created in most Arab countries a strong feeling that they should delay the completion of their real estate projects in anticipation of a bigger drop in steel prices.
Also, the majority of Arab countries and Egypt in particular, saw fierce competition among local producers of steel, which in the end led to a drop in prices of Egyptian steel and made it able to compete with imported steel.
He said that in the past few days, however, the price of imported steel in the region has fallen so low that it has prompted the closure of national and private steel plants in Egypt, since production costs are higher than the latest prices of imported steel.
He added that the UAE, meanwhile, faces a slightly different situation, since there is only one steel producer the Emirates steel Industries whose production covers only 20% of the local market's needs. The company has had to bring down its prices because of the presence of imported steel in the local market. This price drop was bigger than that of Egyptian manufacturers because the UAE had imported larger amount.
Mr Al Nuzhi said while speaking about Turkish steel exports to the Arab world in February and March this year that they rose by 44.7% in comparison with the same period last year. Turkey exported some 1.95 million tonnes, including 1.6 million tonnes of rebar.
During the two months, Egypt imported 678,000 tonnes and the UAE 246,000 tonnes.
(Sourced from Emirates Business)
