UAE steel prices iron out changes
Concerns ease about the potential impact from tariffs imposed by US on the metal
There has been some course correction in steel prices in the UAE in the last three months, but nothing that could prove too much of a burden heading into 2019, industry sources say.
Prices shot up in the first half of the year amid concerns related to fallout from the US imposition of tariffs on steel imports.
But now local steel makers and the broader market are more fixated on upcoming demand than prices.
Prices of rebar — the most commonly used steel product — are between $490-$510 (Dh1,799-Dh1,872) a tonne.
“Demand has increased due to ongoing projects like Expo2020, and the Metro Route 2020,” said Bharat Bhatia, CEO of Conares, the privately owned steel mill operator.
“New tenders at Al Maktoum International Airport will support demand starting from June 2019 for steel rebars, pipes and tubes. Local steel manufacturers can expect a positive outlook until 2020.”
No large-scale dumping
Based on industry projections, local steel mills supply 85 per cent of the rebar demand, with another 15 per cent coming from Oman.
For pipes and tubes, domestic supplies account for 50 per cent of annual demand and 25 per cent is imported from China.
“Pipe and tube producers are trying their level best to fight the competition, but rebates offered by the Chinese government to exporters are making it difficult to cover the cost of raw material for most of the mills in the GCC and UAE,” said Bhatia.
“On other steel products like sheet and sections, China is able to sell 30 per cent of the UAE market consumption.”
Fortunately, there has not been the large-scale dumping of steel products into the Gulf markets after the tit-for-tat tariffs broke out between the US and major steel exporting countries. Steel was one of the first commodities to feel the heat of higher US import tariffs.
“Currently, most US buyers have to add 25 per cent as tariffs, and definitely commodity prices have gone up in the US,” Bhatia said. “But I understand that no trader in the past or present has tried to liquidate any stock at lower prices.
“There is no shortage of steel in the UAE as most of the installed capacity can support current local requirements. Some of the tonnage is also exported, which shows that the installed capacity is more than required.
“Compared to previous years, the market has improved for the local steel manufacturers to maintaining unified quantity and being able to keep prices based on international level.”
New possibilities
Meanwhile, the local market is seeing new capacities being added in other sub-categories of building materials.
Styro, an “expanded polystyrene” manufacturer, has opened a 40,000 square metre facility in Abu Dhabi at an investment of Dh70 million.
It will continue to operate the current facility in Sharjah.
“The way we see it, 6070 per cent of production at the new plant will be used in the local market,” said Walid Wakim, General Manager.
“The expansion gives us 10,000 additional tonnes and which can go up to 15,000 tonnes. The market is definitely headed for better times — and we thought it best to create those new capacities now.”
Styro’s production is used in piling, floor raising and landscaping. Its project portfolio includes City Walk and the Bluewaters island.
85%
of rebar demand supplied by local steel mills, with remainder coming from Oman
50%
of annual demand for pipes and tubes is met by domestic supplies, while China supplies 25%