UAE-based wire rod producers have been experiencing the impact of the recently introduced new import tariffs in Saudi Arabia, which was a large sales outlet for them previously. As a result, stocks in the UAE have been piling up, while prices have gone down significantly over the past month.
The official wire rod prices in the UAE have been settled at $800-805/mt ex-works/CPT, down by $30-40/mt for two of the suppliers and stable for the largest mill. According to sources, all of the sellers are in the market to trade wire rod for August production, while normally they should be negotiating for September. “Basically, the market here is in freefall. Nobody has good order books and with the Saudi Arabian situation ESI [Emirates Steel Industries] has lost a lot of orders. The market has a huge amount of extra stock and negative margins are more or less everywhere,” a local trader told SteelOrbis.
With the new customs rules introduced by Saudi Arabia in early July, the UAE mills have been impacted the most, specifically in terms of longs sales. “ESI alone had around 20,000 mt of wire rod sales to Saudi, and not all business stopped,” a UAE-based producer told SteelOrbis.
Some wire rod producers in the UAE continue to seek to sell outside the Gulf Cooperation Council (GCC) region. The export offers have decreased by $10/mt over the past month to $790/mt FOB. However, the freight market situation weighs on ex-UAE exports. “Today, we receive $85-105/mt freight to Europe depending on the tonnage,” a supplier said.