End-user consumption patterns are changing in the United Arab Emirates rebar market, driven by price sensitivity. Industry participants are calling this a paradigm shift, as secondary mills' rebar sales see increasing demand from end users due to a significant price differential with the benchmark mill.
The price gap between the benchmark mill and secondary mills in the rebar retail market currently stands at AED 90/tonne ($24.5). Traders' stocks of benchmark mill rebar are putting pressure on attempts to increase retail segment quotes. Offers for benchmark mill product range from AED 2,270-2,310/tonne ($618-629), averaging AED 2,290/t ($624).
In contrast, secondary mills' quotes range from AED 2,180-2,220/t, with an average of AED 2,200/t, based on credit and delivery terms.
This price difference is causing private sector end users, particularly those involved in non-government projects, to shift their preferences towards secondary mill rebar. Industry experts suggest this trend is likely to continue until the price gap narrows to around AED 50/t.
A buy-side source commented on the market dynamics: "Given the robust demand for rebar and a payback period of no less than 120 days, traders aim to quote at and above AED 2,290/t delivered for the benchmark mill's rebar in retail [sales]. However, due to competition between traders and in order not to lose orders, traders are compromising and prices remain the same as last week.
"The benchmark mill is expected to announce its August-rolling rebar prices next Tuesday. Based on prevailing global sentiment and imported billet prices, most industry participants anticipate a price rollover.
The mill is on track to complete 80% of rebar deliveries for July orders before the August price announcement, with the remainder to be shipped by the end of July.