Posted on 07 Mar 2023
Rebar prices in the United Arab Emirates retail market do not improve due to overstocking. Traders overstocked in the previous month compete within themselves, especially in the Abu Dabi district, and contractors are holding back despite not having much stocking capability. Contractors bought their medium-term consumption in February when they witnessed price hikes globally, Kallanish understands.
Benchmark mill's average rebar price in the retail is at AED 2,480-2,500/tonne ($675-681), and tier-two mills' at AED 2,430-2,450/t, all delivered and on a credit basis. Prices exclude VAT. The gap narrowed more than usual. The benchmark mill has still not shown its intention to offer a second round of sales at a discounted price - the so-called project discount- even for limited quantities, which sold rebar in January and February as a sign of a new sales strategy.
In February, it sold nearly 32,000t of rebar at AED 2,290/t cpt ($623) across the country on a credit basis during the second round of sales, distributed proportionally to its customers upon buyers' monthly quotas, who booked 100% in February. It's announced February, Abu Dhabi delivered rebar price was AED 2,448/t, while delivered to Dubai, Sharjah, and the Northern Emirates at AED 2,454/t.
It has been heard that the benchmark mill has maintenance in one of its rolling mills, and the orderbook is full after concluding a rebar export deal for April shipment, therefore, it will highly likely not come to the market for the second round of sales.
"Contractors are holding back and resisting price increase since they budgeted in September rebar cost at around AED 2,000-2,050/t delivered. Current retail prices are nearly 20-25% higher than in the third quarter of 2022 when projects were awarded. In the overall cost, among 650-700 different items, rebar cost constitutes 6-7% for villas and small buildings whilst 8-10% for big and high-rise buildings." explains a buy-side source. "When rebar prices increase, contractors' margins decrease substantially that's why they are price sensitive."
In March, tier-two mills quoted rebar at around AED 2,390-2,435/t delivered on a credit basis, whilst benchmark mill announced an increase by AED 92/t ($25) on February to AED 2,547/t cpt Dubai, Sharjah, and the Northern Emirates and AED 2,540/t cpt Abu Dhabi. The benchmark mill offers a monthly rebate to its contracted customers subject to pre-agreed quota fulfilment.
Source:Kallanish
