GCC steel: Ramadan limits trading activity

Trading was thin this week in Gulf Co-operation Council (GCC) countries, as the Islamic fasting month of Ramadan has started. With activity subdued, participants expect steel prices to decline in the coming days, tracking softening raw material and billet.

The UAE's largest steelmaker Emirates Steel has completed its May shipments and is not actively offering to the market at the moment, traders said.

The mill had retained its listed rebar offers unchanged since March at 2,007 UAE dirham/t ($546/t) ex-works. Regular buyers receive discounts on their purchase volumes in addition to the announced prices, traders said.

Other steelmakers are offering rebar to the market at Dh1,900–2,000/t ($517-545/t) ex-works and most have completed their May shipments.

In the secondary market, stockists are offering Emirates Steel's material to end-users at Dh1,980-2,000/t ex-warehouse, while material from other producers is offered at Dh1,930-1,940/t ex-warehouse.

UAE and Oman-based mills are still selling large volumes of rebar to Saudi Arabia, thanks to higher domestic rebar prices in the latter. Around 40,000t of rebar was shipped to Saudi Arabia from these countries recently at around 2,200 Saudi riyals/t ($587/t) delivered to customer, traders said.

By comparison, Saudi Iron and Steel (Hadeed), a fully owned affiliate of state-owned Sabic, retained its domestic rebar offer at SR2,400/t ($640/t) ex-works, but lowered the price of wire rod by SR100/t to SR2,300/t, traders said.

Saudi Arabia's rebar premium over other GCC members is likely to continue supporting export shipments from regional producers into the country.

In the semi-finished market, Indian billet was offered to the UAE at $450/t cfr Jebel Ali this week, but buyers are targeting $440/t cfr, market participants said.

There have been sales of CIS-origin billet to Saudi Arabia at $450-455/t cfr levels, over the past few days. And one Saudi mill is in the market looking to buy 40,000–50,000t of billet at $445/t cfr Jeddah, a trader said.

Saudi mills are keen to procure billet as domestic scrap prices, which hover around SR1,300/t cpt ($347/t), render production from billet a more lucrative option. In addition, Saudi domestic scrap is generally regarded as lower quality compared with HMS 80:20, market participants said.

Rebar demand has picked up in Saudi Arabia after the government released funds for some major projects in January. But market participants expect a slowdown in construction activity and so rebar demand not only in Saudi Arabia, but in all GCC countries during Ramadan and the following summer months.