REBAR RISES: The influence of Turkish steel producers and the increasing cost of iron ore is adversely affecting rebar prices in the UAE.
Reinforcing steel bar (rebar) prices in the UAE have shot up by 30% within a week and are expected to cross US $1,150 per tonne (AED4,223 per tonne) next month.
Last week, rebar was selling for $980 in a steel futures contract expiring in the first week of April on the Dubai Gold and Commodities Exchange (DGCX). There were no sellers for the May contract at that price, insinuating a further increase in the price of steel.
There are two reasons for this jump in prices," said Pankaj Gupta, regional manager of brokerage firm, SMC Comex, which is trading on the DGCX.
One is due to the cost of iron ore, which went up by 55% recently, and the other is due to Turkish steel producers constantly raising their prices every day. And since most of the steel imported into the UAE is Turkish, it is causing a massive problem.
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The DGCX is the Middle East's only commodities exchange, which has an international tradable steel rebar contract allowing manufacturers and customers to lock-in prices.
"Most of our contracts cover us for this but if they didn't, this situation would have caused us serious damage," said Khalil Ibrahim, Middle East manager of piling company, Intrafor HK. "It is making it difficult for us but we're getting along for now. At the moment we are paying about $1,144 for a tonne of rebar, and it's rising constantly.
But some contractors and developers in the market feel that steel producers are dishonest about the quantity of their stock, resulting in a rise in prices.
Gupta added: "Producers haven't been selling for the past 15 days, and I don't think that steel suppliers are completely out of stock. But if you know that your steel is going to be worth almost twice as much in a week, any businessman would hold on to it and sell it when the time is right.
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