MEIS 2018: Saudi Arabia, UAE suffer indirectly from Section 232

Saudi Arabia and the United Arab Emirates (UAE), the second and third largest steel consuming countries in the Middle East, have suffered mostly indirectly from the impact of Section 232, executives said during a panel at the Middle East Iron & Steel Conference in Dubai on December 10-12.

“We have not seen much of a direct impact [from Section 232 on the UAE]… But there is an indirect impact – the global steel market and market sentiment has been affected by the trade war, which has impacted prices. Scrap prices have fallen, so consequently billet has fallen and finished product prices are now also falling,” Saeed Ghumran Al Remeithi, chief executive officer at Emirates Steel said during the executive panel.

In Turkey - the largest scrap importing country - Fastmarkets’ daily index for United States-origin HMS 1&2 (80:20) was $359.99 per tonne cfr on average over the second half of 2018 up to December 20, decreasing by 8.65% against the average index during the first six months of the year due to the weakening of the global steel market of steel products.

Meanwhile, the daily index for billet exports from the Commonwealth of Independent States (CIS) – the largest global supplier of billet – was $420 per tonne fob Black Sea on average in the second half of 2018 up to December 20, falling by 18.29% compared to the January-June average index. The price dropped on increased competition in the global market, when Turkey began exporting billet.

“The price in the UAE has gone up this year, but then decreased in the second half of the year,” Al Remeithi added.

Fastmarkets’ average weekly price assessment for domestic rebar in the UAE was at 2,210 dirhams ($601.60) per tonne ex-works in 2018 up to December 20, which was a 15.74% increase from the average assessment a year before.

Meanwhile, in the second half of 2018, the domestic rebar market assessment in the UAE declined by 11.86% to 2,065 dirhams per tonne ex-works, compared with the first half of 2018.

“We have had an indirect impact from countries who used to export to the US. In addition to China, Turkey has become a potential exporter to the region due to its geographical location and the currency depreciation [in Turkey],” Rayed Abdullah Al-Ajaji, chairman of the Saudi National Committee for the Steel Industry, said.

In 2018, the US imported 1.04 million tonnes of steel from Turkey, according to US Department of Commerce data - including licensing data for November and December. That was a 47% decrease from 2017, when the US imported 1.98 million tonnes from Turkey.

Meanwhile, Turkey continues to ship only small tonnages of steel products to Saudi Arabia, the Turkish Steel Exporters’ Assn reported.

Turkey used to supply large tonnages of rebar and billet to Saudi Arabia in the early 2000s. Yet once the construction boom had calmed down and Saudi Arabia increased its own steel output, imports from Turkey almost faded out entirely.

In 2017, finished steel product consumption in Saudi Arabia was at 11.83 million tonnes, while the UAE consumed 7.93 million tonnes, the World Steel Association said.

The largest steel consumer in the Middle East is Iran, who used 19.96 million tonnes of finished steel products last year.

Iran was not directly affected by Section 232, but certainly suffered as a result of the economic sanctions imposed against it by the US in early August.

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