UAE rebar end-user demand shifts over price sensitivity
Traders in the United Arab Emirates observe increased retail rebar sales from non-benchmark mills other than Abu Dhabi in August due to the price differential with the benchmark mill.
End users are demanding lower quoted rebar, and for September, Oman's Sohar Steel is expected to increase its rebar sales.
The benchmark mill, Emirates Steel, announced last week that September delivery rebar quotes roll over from August for the fourth month in a row, at AED 2,442/t ($665) ex-works, AED 2,450/t ($667) cpt Abu Dhabi and AED 2,458/t ($669) cpt Dubai, Sharjah and Northern Emirates theoretical weight payable by LC 90 days after delivery. Other rebar producers are following suit with minor exceptions, e.g., an increase attempt by AED 20-30/t on-August, notes Kallanish.
To prevent its market share from diminishing, the benchmark mill may come for a second round of sales for limited quantities at a significant discount for its distributors by next week to secure a 60-65% domestic market share.
Earlier this week, the benchmark mill's delivered rebar price slipped AED 15-20/tonne ($4-5.4) to AED 2,380-2,400/tonne in retail. Secondary mills, including Oman's Jindal Shadeed, were steady at AED 2,270-2,300/tonne and tier-three mills at AED 2,250-2,260/tonne on a credit basis. In the Northern Emirates, tier-three rebar is still available at AED 2,210-2,220/t delivered against cash payment.
"Contractors certify and approve the purchase of rebar from at least two non-benchmark mills. Since the gap between the benchmark and non-benchmark mill was over AED 100/t in August, end-users have increased their rebar intake for the lower-priced mill," explains a buy-side source. "We believe that the benchmark mill has noticed that its market share is diminishing due to price sensitivity in the retail sector. Hence, a second round of sales - project sales - may come next week."
Most rebar producers have announced a rollover from August, varying from AED 2,200 to 2,235/t delivered on credit. However, the negotiations to finalise the deals will be completed by the end of this week.
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