UAE steel prices soar on tight supply
Dubai, March 20, 2008
Reinforcing steel bar (rebar) prices in the United Arab Emirates have risen at least 12 per cent in the last three weeks as demand from construction contractors has increased and supply has tightened.
A tonne of rebar fetched around $970 on Wednesday, and was around $860 last week of February, traders said. 'Demand for steel is increasing everyday, and many contractors want to meet the deadline for their projects at any cost,' one dealer said.
'On the other hand, the availability of steel is decreasing, and that is why prices are rising and they may soon hit $1,000.'
UAE suppliers of ready-mix concrete are struggling to keep up with demand with the risk that construction projects may be delayed further, Emirates Business reported on March 5, citing cement companies and contractors.
'Many suppliers won't sell if you are asking for less than 300 tonnes of steel, and some have much higher ceiling for orders,' another trader said. 'So if you are a small contractor you are facing a major problem.'
A pick-up in international billet prices have also boosted domestic steel prices. Demand for steel in the UAE was 3.5 million tonnes in 2006, according to a report from the Gulf Organisation for Industrial Consulting.
It said demand for iron and steel products in the world's biggest oil exporting region, where more than $1 trillion of infrastructure projects are in the pipeline, would climb 31 per cent to 19.7 million tonnes by 2008.
The UAE's deputy prime minister ordered a countrywide lifting of customs duties on cement and steel on Sunday.
The move comes days after Sheikh Sheikh Mohammed bin Rashid al-Maktoum, also ruler of Dubai, issued a decree ordering a temporary lifting of the levies in the emirate to control rising costs for building materials.
The UAE has agreed with its Gulf Arab partners to create a customs union, fixing duties at a minimum 5 per cent. Consultancy EC Harris has said costs in the UAE, centre of a regional construction boom, could jump by a fifth next year on higher material and labour costs.
It added that costs for materials such as cement and steel could rise 19 per cent during the next 12 months. In neighbouring Saudi Arabia, Saudi Basic Industries Corporation (Sabic) has cut prices of reinforcing steel by 4.8 per cent last month to 2,980 riyals per tonne but kept the price of steel bars unchanged, traders have said.
The Dubai Gold and Commodities Exchange (DGCX), the Middle East's only commodities bourse, in October launched the first international tradeable steel rebar contract in order to allow manufacturers and customers to lock in prices in the steel market, which lacks a transparent global benchmark for setting prices or hedging risk.-Reuters