Local GCC billet trade challenging due to advantageous exports, lower rebar price

Wednesday, 29 September 2021 17:12:12 (GMT+3)   |   Istanbul

Domestic billet trade is expected to be under even more pressure in the Gulf Cooperation Council (GCC) region, taking into account the recent sizeable drop in rebar prices announced by key local producers. In such a situation, large billet sellers in the region are expected to continue focusing on export sales for which prices are much better, even despite a certain weakening seen in China.

While bids for domestic origin billet are already low in the UAE and Oman, from this week they are foreseen to be even lower, taking into account the rebar price drop announced by Emirates Steel Industries (ESI). The producer has cut its official rebar offer for October production by $55/mt compared to last month to $655/mt ex-works. Such a drop is expected to naturally increase the pressure on the billet trade since the gap with rebar offers has narrowed down and may narrow further if additional discounts are provided. The indicative offers from Oman have decreased by $10/mt over the past week to $620-630/mt CPT from medium and small-sized producers. UAE-based wire rod producers report they are ready to pay $620-630/mt CPT maximum for required steel grades, which usually include some extras. However, local wire rod prices in the UAE are at $730/mt CPT, providing a larger gap compared to rebar. “I think rebar rollers will need something far below $600/mt CPT which is definitely not there today,” a source told SteelOrbis.

Large billet suppliers from the UAE and Oman have been increasing the pressure on the local billet trade as the allocation they are willing to give for domestic buyers will certainly be limited. The Chinese market, although weakened in terms of acceptable import prices, still remains an attractive option for GCC region-based exporters. One of the Omani mills is aiming to sell at $655/mt FOB, with estimated freight of $60/mt. In the meantime, the latest deals to China from various sources have been closed at $700-705/mt CFR and the level slightly below $700/mt CFR is said to be the current tradable level.

In Saudi Arabia, local rebar and wire rod prices have decreased by almost $107/mt after being stable for a while, to $720/mt and $773/mt, respectively, both on CPT basis. Although the price levels are still relatively high, billet imports from the CIS will be hardly workable in terms of prices.

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