Turkey slashes steel prices to undercut Qatar

Steel has been volatile this year. (Picture illustrative only)

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Steel producers in Qatar are being edged out by Turkey in their price competitiveness as the metal rises overall against falls in cement and vehicle hires of up to a third, according to statistics.

Data gathered by Statistics Centre – Abu Dhabi, which collects data across many industries as well as economic surveys based in the UAE capital, has found the Eastern European state undercutting rivals in Qatar since the beginning of this year as the price for number of steel products fluctuate.

The average price per tonne of 10-25mm steel bars from Turkey last month stood at AED2,183, the same as the UAE, compared to AED2,400 in Qatar. Turkish hightensile steel per tonne was AED2,208 compared to AED2,216 in the UAE and AED2,267 in the gas-rich state.

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The beginning of this year also saw a similar discount, with steel bars reaching as low as AED2,001.3 from Turkey in February against AED2,007.5 in the UAE and AED2,012 from Qatar.

But the price spike at the beginning of the second quarter, partly driven by the biggest miners capitalizing on the increasing price of iron ore - one of the key ingredients in steel - by renegotiating contract terms and conditions, saw Turkey temporarily lose out in the Gulf region. Steel bars from the country rose to AED2,825 against AED2,783.5 and AED2,758.3 in UAE and Qatar respectively in May.

Local steel suppliers such as Mr Govia at Gulf Steel Industries had highlighted to ConstructionWeek last month as to the competition from Turkey. By contrast, Ahmad Matar, general manager at Al Arrab Electromechanical Engineering, told the publication in an interview that the supply of materials in Qatar has dramatically improved in the last three years, reducing the need to import. The company is currently working on MEP work for seven towers in the landmark Pearl Qatar project.

Construction-related steel products have largely increased in value over the last year. Steel bars from Turkey have risen 6.2% from July 2009 to last month, with UAE hightensile steel up 6.8%.

By contrast the SCAD statistics also underline the pressures on cement producers in the region to maintain a profit on the back of smaller a fewer orders and a declining price-per-tonne of the material.

A tonne of ordinary Portland cement from Al Ethad, for example, has fallen from AED341 to AED260 between July 2009 and July2010, a decline of more than 23%. Sulphate-resistant cement from Al Ethad has fallen AED70 per tonne from AED350 to AED270 – down more than 22%, with the same cement from Emarate falling by a quarter to AED260.

The statistics also found an increase since January of monthly rentals of key machinery and vehicles.

A Loader 950 has seen the biggest rise in rental price, with an average of AED10,000 swiftly rising to AED13,375 from January to July, up 33.75%.

A 230-290m³-capacity excavator rose about half that amount in percentage terms, with an average price of AED15,000 swiftly rising to AED17,000 in May and then AED17,500 in July – up 16.6% in seven months.

A standard truck with a capacity of 20 metres2 saw the next biggest rise, up 8.7%, from 16,000 to AED16,500, followed by a Loader 966 (6.6% increase), a standard truck with a 30 metre2 capacity (4.6%) and a bulldozer d9 (3.5%).

All rental prices exclude the price of diesel, according to SCAD.