MEIS 2018: Middle East steel market outlook changing on improved oil prices - AGIS ceo
The outlook for the steel market in the Middle East is improving because of improved oil prices, Abu Bucker Husain, chief executive officer of United Arab Emirates-based Al Ghurair Iron and Steel (AGIS) said in his presentation on Tuesday December 11 in Dubai.
2017 had been the worst year for contracts being awarded in the Middle East since 2012 but now investment in construction, infrastructure projects and the oil and gas sector has returned, this could all change, Husain said at Fastmarkets MB’s Middle East Iron and Steel Conference.
Saudi Arabia, the UAE and Iraq have the biggest number of projects, with the biggest steel-consuming projects surrounding construction, oil and gas and transportation, Husain noted.
The oil price has risen gradually in recent years, with the average annual price of West Texas Intermediate (WTI) at $40.68 per barrel in 2016, at $52.51 per bbl in 2017 and at $70.28 per bbl over 2018, according to Husain. He added that oil prices are expected to maintain their strength due to the United States’ sanctions on Iran and production cuts in Venezuela.
The HDG market
The UAE produces about 1 million tonnes per year of hot dipped galvanized coil (HDG) of which it consumes about 400,000-500,000 tpy of HDG, while domestic HDG imports are over 400,000 tpy.
The HDG from China is not approved by authorities in the UAE, so cannot be used for state-supported projects, however, the HDG from India has approval and is able to be used for such projects.
That is the reason why HDG buyers in the UAE are willing to pay $50-130 per tonne more for India-origin HDG.
Offers for 1mm HDG from Chinese suppliers remained at $640-650 per tonne cfr this week, while offers from India were around $780-790 per tonne cfr.
Fastmarkets’ official price for the UAE HDG import market was assessed at $640-760 per tonne, cfr Jebel Ali, today on December 11.
Meanwhile, the price of locally produced HDG is at $820-825 per tonne ex-works in the UAE.
When asked if there is any plan to take measures to protect the country from low priced imports of HDG due to high capacity already, Husain said there is a need but no concrete steps have been taken so far.