Rusmet reported that there is no autumn rally in the Middle East countries’ market in 2009. The demand for construction steel products remains low in the region and the prices continue to decrease.
In the first decade of October domestic quotations for rebar somewhat reduced in Iran, UAE and Turkey. The prices for Turkish rebar in UAE and Egypt is officially USD 485 per tonne to USD per tonne CFR. However, as per the traders, some exporters may reduce the price to USD 475 per tonne CFR and even lower. Purchases volumes remained the same during recent 2 or 3 months. That is why metallurgical companies, which used to increase output in September hoping for sales growth, now have to reduce it again.
In recent days there were enough optimistic announcements in the market. In particular, the Dubai chamber of commerce has forecasted the emirate’s economy growth. The information about soon recovery of construction industry of UAE and other Gulf countries occasionally appears in regional and world media. However, these talks have been held from the beginning of summer. The expectations have not come true yet.
By all means, sooner or later regional market will start growing. Even now the demand can not be called weak. The problem is that the suppliers compare current situation with the before crisis H1 of 2008, when Middle East construction boom was supported by peak oil prices and affordable loans. This advantageous situation is unlikely to repeat in nearest years. Accordingly, the demand for construction steel in Middle East countries is back at the level of 2005 to 2006. At that import decreased even more due to start of new metallurgical plants in UAE, Iran and Saudi Arabia.
By all means, in nearest months rebar purchasing volumes by consumers in North Africa and Gulf countries will be rather stable. As per the Turkish Statistical Institute, basic metals output volume in Turkey decreased in September by 2.6 % comparing with August. In October the decrease by another 2.5% is forecasted. Some rolling companies say that due to the review of production plans they suspend semis purchases since they have enough semis till the end of current year.
However, rather high semis and scrap prices can keep long products from fall. The prices for the US HMS â„– 1&2 scrap has been stabilized at the USD 285 per tonne to 290 per tonne CFR level when delivered to Turkey and decrease very slowly. The quotations for Ukrainian and Russian semis fell from the beginning of October from USD 435 to USD 445 to USD 400 per tonne to USD 420 per tonne FOB. However they are unlikely to fall further.
Accordingly, Turkish exporters will have no reason to reduce the prices to less than USD 450 per tonne CFR. Finally, there is the demand for contraction steel in Middle East countries. But it occurred to be much lower that metallurgists expected. But low prices for rebar protect regional market from Chinese products. In the beginning of October there were announcements about the offers of Chinese wire rod micro alloyed with boron at USD 490 per tonne to USD 510 per tonne CFR in UAE, however, rebar exporters in PRC can not rely on VAT refund. That is why they can not reduce the prices to this level.
