As the global steel market remains frigid the Middle East market is warming up to theatrics in the battle of bits. As the global demand sinks steel market in Middle East has remained at least lukewarm nudged by oasis of infrastructure and construction activity in Saudi Arabia and Iraq.
Lack of perceptible demand growth even after the MENA after settling of dust in Egypt and Libya has been dampener. However shifting demography has entailed activity in UAE. Instability in MENA nations has compelled the affluent populace to shift to Dubai culminating in hiked demand in housing and reality sector. Even though it has not led to major demand increase but certainly provided the straw to cling on.
Steel off take has chugged on in UAE with import threat perpetually looming overhead. UAE consumes nearly 2.5 million tonne of rebar and WRC per annum. However the domestic mills are able to cater to only 1.2 million leaving the gap to be bridged by imports. Bulk of the import cake is taken by Turkish mills having enjoyed technical approval in most projects at the cost of domestic mills who are new entrants.
In retail the tug of war between the domestic mills is always on shifting the balance one way or the other depending on market condition. However off late the domestic mills have been gnashing their teeth by an all out price war to leading to parity advantage vis-à-vis imports. Even though the impact is questionable but it has certainly dented the confidence of traders eager to sneak in. Nonetheless domestic end-users have effectively camouflaged their requirement taking advantage of 5% duty waiver and indulging trading thereby diluting protectionism to some extent.
Eventually the game of up brinkmanship has left both the sides mauled with no winner. If the domestic prices have lost 2% in the last fortnight so has the import levels been sinking with Rebar offers at 570 per tonne to USD 575 per tonne CNF being repudiated. Surprisingly a meagre USD 10 per tonne to USD 15 per tonne gap between billet and rebar prices have come down heavily on local rerollers who opted for rebar instead.
Scenario is equally mired in flat products with last bookings reported at USD 550 per tonne by Indian mill (about a week ago) in HRC. Current offers of USD 560 per tonne are not evoking interest. Likewise last booking for Plates from Korean source was at USD 570 per tonne, however current offers at USD 580 per tonne is falling flat.
Remarkably both the Chinese and Iranian mills are absent from the flat market owing to quality and financing concerns respectively.
As the year draws to close and global steel market still struggling to wriggle out of the depressive grip not much is expected to happen.
Source - Strategic Research Institute
(www.steelguru.com)
