September 08, 2008
DGCX to start trading in rebar futures today
The Dubai Gold and Commodities Exchange will begin trading steel futures today on October 29th 2007.
DGCX in a statement said that "The contract provides the region's steel community with a cost effective tool to hedge risk arising from extremely volatile prices. In addition, it offers an alternate and attractive avenue for investors with exposure to either steel equities or the physical market.
Mr Colin Griffith chairmen of DGCX said that the contract is open to all international companies and investors. He said that “It will lead to best price discovery for Dubai rebar, which is relevant to the European and Asian long product steel market.”
Mr John Short ED Steel and Base Metals with Dubai Multi Commodities Centre said “Currently, almost all steel is bought in the physical forwards market. Given that a bulk of the steel in the region is either imported or locally produced from imported semi-finished steels, most of it, at some point in the supply chain, is bought based on forward prices. The new DGCX futures price for Dubai rebar will not only factor in the market’s views on these forward prices, but also serve as a ready reference for spot prices. DGCX Steel Rebar futures price is set to evolve as the benchmark for prices of regional rebar as well as other price-correlated steels. Reason being, Dubai is the single largest import market, both for rebar as well as billet, used for producing rebar.”
Rebar accounts for the major portion of steel imported into the region because of the ongoing construction boom. DGCX said that rebar consumption in the GCC in 2006 was estimated to be 12 million tonnes and demand is expected to grow about 9% until 2010 against the global growth of 3%. UAE's rebar demand is about 4 million tonnes per year while Saudi Arabia's consumption is put at 5 million tonnes per year. DGCX said the region is estimated to import around 10 million tonnes per year in the next decade. Turkey is a major supplier of rebar to the UAE market, while 65% of the regional supplies come from Gulf based steel mills.
The list of approved rebar makers include
1. Kromen of Turkey
2. Emirates Iron and Steel Company of UAE
3. Izmir Demir Celik Sanayi of Turkey
4. Ekinciler Iron & Steelworks Inc of Turkey
5. Diler Iron and Steel Co Inc of Turkey
6. Al Tuwairqi Group of Saudi Arabia
7. Hadeed
8. Qatar Steel Company.
