Steel prices in the UAE have risen about 15 per cent so far this month as a construction boom in the GCC oil exporter has drained the building materials market, traders said.

A tonne of reinforcing steel bar (rebar), used in construction, fetched around $1,550 on Wednesday, up from around $1,350 in the last week of June, dealers said.

One executive from a Gulf steel producer said he expected prices to hit $1,650 a tonne by the end of the month.

The rising cost of building materials is helping fuel inflation across the Gulf.

The GCC is investing heavily in real estate and building material suppliers are struggling to keep up with demand in the UAE.

'Prices of steel and other construction materials have not eased, even for a single week, since the beginning of the year and I don't see any signs of a downward trend,' one Sharjah-based trader said.

'What we have now is limited supplies of steel, higher demand from construction contractors and costs of manufacturing steel at origin are going up due to inflation in these countries,' he said.

Global rebar consumption reached 218 million tonnes last year. Around 65 to 70 per cent of consumption comes from the Middle East and Asia while the highest consumption per capita is in the UAE.

The total value of civil projects in the Gulf is estimated at around $1.5 trillion, and demand for housing is expected to soar on robust population growth, particularly in Saudi Arabia, analysts have said.

Gulf rebar consumption was expected to reach 14m tonnes this year, a 13 per cent increase from last year, they added.

'Every producer in the region is trying to increase output to meet demand from the construction sector and our imports bill is increase everyday on inflation,' a steel trader said.