/Ramadan in Muslim countries continues. About two weeks left till its end (Sep. 9). Current situation in Middle East steel market is rather advantageous for the manufacturers. The demand for construction steel in the region, as expected, is at a minimal level. However the manufacturers still manage to keep the prices from the fall.
Turkish companies just before Ramadan tried to raise rebar prices to 600-610 per ton FOB. This attempt failed. However, the prices just returned to the previous level ($590-600 per ton FOB). Rebar prices in CIS countries stabilized in the interval $570-580 per ton FOB. Wire rod of Turkish and Russian origin is offered for export at $600-610 and $580-590 per ton FOB.
This price stability is explained by , first of all, rather high buying activity in Middle East region. Many local companied conclude e contracts with delivery in Sep.-Oct. in order to refill the stockpiles before the expected rally in the market. Besides, the suppliers do not want to concede, since they have to pay much for raw materials and semi products. Imported rebar price in Turkish market in recent days started increasing again having reached $390-400 per ton CFR. The prices for semis from CIS are keeping at $540-550 per ton FOB for three weeks.
In the first half-year Middle East countries market fluctuated simultaneously. Today each country “goes its own way”. Due to this the manufacturers always get new sale market which allows them to keep sales. Thus, in early August there was a fall in Saudi Arabia, where the demand fell to the lowest level in recent 10 years and some local rolling mills reduced the outputs. UAE traders almost do not buy imported rebar, since the market is well supplied with local products. The demand in Iraq also reduced recently.
Turkish rebar is bought by Egypt, Iran, and Oman, where the market is increasing and domestic prices are growing. Until recent time the demand for construction steel was rather active in Turkey as well. Long products from CIS are exported to Eastern Mediterranean. Rebar and wire rod are exported to South-East Asia, where the traders also refill the stockpiles preparing for the rally in construction sector in September after rain season.
Most manufacturers believe that nest month real consumption of construction steel will start growing, which will allow to prolong the prices increase. Turkish companies today offer rebar to the Arabian Gulf countries at $ 605-620 per ton CFR and says that the prices will grow soon. According to preliminary data, CIS exporters are also planning to increase rebar and wire rod prices on October contracts by $20-30 per ton.
But the manufacturers should be very careful in this situation and do not accelerate output volumes expanding. Although, according to large scrap purchasing volumes by Turkish companies, many suppliers have such plans. Steel output in the Gulf countries boosted (especially in Qatar, where this figure almost doubled in the first seven months of 2010) whereas the consumption volume is growing slower. This means that the demand in the region will g row after Ramadan, but we should not expect the boom.