Posted on 16 Jul 2024
End-user consumption habits are changing in the United Arab Emirates, in what industry participants call a paradigm shift. This is due to the price differential between the benchmark mill and secondary mills in the rebar retail market of AED 90/tonne ($24.5). Secondary mills' rebar sales are seeing increasing demand from end users, Kallanish notes.
This week, traders' stocks of benchmark mill rebar are putting pressure on traders' attempts to increase retail segment quotes. Offers stand at AED 2,270-2,310/tonne ($618-629) for benchmark mill product, at an average of AED 2,290/t (624). Secondary mills' quotes range from AED 2,180-2,220/t, at an average of AED 2,200/t, based on credit and delivery.
As a result, private sector end users, particularly those involved in non-government projects, are shifting their choices in favour of secondary mill rebar. This preference is likely to continue until the price gap narrows to AED 50/t, according to industry participants.
"Given the robust demand for rebar and a payback period of no less than 120 days, traders aim to quote at and above AED 2,290/t delivered for the benchmark mill's rebar in retail [sales]. However, due to competition between traders and in order not to lose the order, traders are compromising and prices remain the same as last week," comments a buy-side source.
On Tuesday next week, the benchmark mill is expected to announce its August-rolling rebar prices. Based on the prevailing global sentiment and imported billet prices in the market, the majority of industry participants anticipate a price rollover.
The benchmark mill is expected to complete 80% of rebar deliveries for July orders before the August-rolling rebar price announcement, due on 23 or 24 July, with the remainder to be shipped by end-July.
Source:Kallanish
