Although more deals news has been heard in recent days compared to the end of 2008, it is obvious that overall activity in the Middle East flats market is currently far weaker compared to the first quarter of 2008. Even so, some small stirring of activity has been observed in this region.
Meanwhile, activity in terms of both prices and demand has been seen in the Saudi Arabian flats market with the beginning of 2009. It seems that the most active flats market in the Middle East for the time being is Saudi Arabia. A price increase from Saudi Arabian flats producer Hadeed SABIC had been expected and, indeed, so far at the beginning of 2009 Hadeed SABIC has increased its flat product prices twice. First, in the earlier days of 2009, the producer increased its base HRC prices from $450/mt to $480/mt ex-works. Then, the producer this week raised its base HRC price from $480/mt to $510/mt ex-works. Accordingly, the service centers and stockists in this country have also increased their prices. The recovery in question is stronger with regard to HRC and HRS than for HDG. At this country's stockists, the imported 1.2 mm HRC price levels are at SAR 2,200-2,400 /mt ($586-640/mt), whereas the prices of import CRC are at SAR 2,800-3,100/mt ($746-826/mt) and the prices of HDG are at SAR 3,300-3,800/mt ($880-1.03/mt) - all prices are ex-warehouse.
On the other hand, importers in Saudi Arabia have started to make purchases. A deal for HRC has in the past week been concluded from Egyptian producer EZDK at $480/mt FOB. Egypt has been chosen for purchases due to the country's duty advantage, as Egypt does not impose any export duty on flats. In addition, when Saudi Arabia imports from non-Arab countries, a five percent import duty is implemented. On the HDG side, since Chinese origin offers are too high, material is being bought from the HDG producer in Jordan. The main reasons behind this choice are that the material can be transported by truck and also the delivery time is short.
Looking at the UAE, the demand for flat products cannot be described as being very strong in this country. Another problem in this country is that the banks are very reluctant to open letters of credit. Ex-South Africa base HRC offers to the UAE have this week been at $480/mt CFR Dubai for March shipments, whereas ex-Russia base HRC offers to the UAE have this week been at $420-430/mt FOB. It is also heard that during the week Ukrainian flats producer Donetsk concluded a deal for 10,000 mt of plates to the UAE at the price level of $510/mt CFR Dubai.
Regarding Egypt, this country has started to give flats offers for April production material since order books in this country has been filled for March, in particular following the deals concluded to Turkey and the Middle East. SteelOrbis has been informed that ex-Egypt HRC offers to the export markets are currently in a price range of $480-485/mt FOB for April shipments. It is highly possible that Egypt will sell its flat products especially to the Middle East due to the abovementioned duty advantage. However, it is observed that buyers in the export markets are not leaning towards ex-Egypt flats offers for late April/early May deliveries, as they are unable to foresee the overall market situation so far into the future due to the economic crisis.
It is almost certain that the Middle East countries will maintain their purchasing activity according as their stock levels decline. Also, it seems that the extent of the demand revival in these countries' local markets depends on the flexibility of the banks as regards issuing credit.