Posted on 26 Apr 2022
The United Arab Emirates rebar market has a new entrant following Arabian Gulf Steel Industries (AGSI)’s acquisition of Sharjah-based Star Steel last year. The former is now converting its merchant billet production into rebar using the latter’s rolling mill.
The takeover has made AGSI the second integrated mill in UAE after Emirates Steel (ESI). AGSI started rolling 16mm and 20mm diameter rebar some time ago, as the market was seeing a shortage of this material due to slow shipments by ESI. AGSI has contacted traders and stockists, informing them it will have more diameters of rebar ready to be shipped for May deliveries once it announces prices, Kallanish learns.
Last Friday, most UAE mills elevated their rebar quotes by AED 50/t ($13.5) to AED 3,130-3,175/t ex-mill, payable 90 days after invoice date with an AED 25-75/t discount applicable, for May deliveries.
"The price increase contradicts the global trend of a sharp fall in scrap prices and stability of iron ore. Traders and stockists are experiencing slow rebar shipments [by mills] of their April orders, which is causing a shortage of certain diameters of rebar,” explains a local sector participant.
"From 5 May, after the Eid holiday, delayed rebar shipments and May order shipments will resume, so there will be a stockpile of rebar. Traders and stockists intend to go for minimum procurement, which may force mills to offer an extra discount to increase their sales,” he adds.
In the retail segment, the market is slow but expected to be slightly better after the Eid holiday. ESI rebar is transacted at AED 3,100/t and non-ESI rebar at AED 3,030-3,040/t, both delivered to buyer’s yard. Credit terms in UAE are between 120 and 150 days. However, procurement is mostly 90 days after the invoice date.
"When I weigh the pros and cons of AGSI's rebar supply, there is one more rebar brand in the tight market,” opines another sector participant. “Quality certification and the acceptance of its products by large governmental or private projects are the challenges AGSI material will face. Still, being a local producer, they can overcome this issue, I guess.”
In March, AGSI obtained the Cares certification for BS 4449:2005 Grade B500B Bar 10 to 40mm carbon steel bars and coils. The mill is expected to overcome quality concerns and address the market shortage for specific diameters of rebar if it offers competitive prices.
Source:Kallanish
