The recent flutter in international price has throttled efforts by the mills to cope and cater the depression in this MEA region.
It is evident that the Middle Eastern market has remained largely unscathed from the glimmer of revival visible elsewhere. Rebar mills being the mainstay of Middle Eastern steel market are sinking under its own weight as the consumption of rebars in UAE, has plummeted by a heart breaking 50% from around 5.5 million tonnes last year, to 2.6 million tonnes in 2009.
Undoubtedly the domestic demand has remained abysmal crushed with impunity every time it has raised its head marked by consecutive debacles. The fear of economic bankruptcy has left an indelible imprint on the sagging economy.
Reeling under the endless gloom rebar prices have towed declination. Rebar is being quoted at around AED 1850 per tonne (USD 503) in the domestic market.
It is noteworthy that billet prices have appreciated by USD 30 per tonne in the last month primarily fuelled by spurt in scarp prices. However this flurry has augured pain rather than pleasure for the mill owners as the input cost have bloated with lack of corresponding pick up rebar prices. Currently rebar is being offered at USD 470 CFR UAE squeezing the margins of re-rollers as downstream prices refuse to pick up.
At the contemporary offer levels a price of AED 1950 per tonne to AED2000 per tonne is fathomable but it seems illusory.
The horizon seems murky for the producers as billet prices continue correction touching levels of USD 420 per tonne to USD 425 FOB Black Sea, with indication of furtherance as scrap prices are in for a roller coaster.