UAE steel buyers could face $1bn losses

UAE steel buyers could face up to $1 billion in losses following a 50 percent drop in prices since July according the executive director at the Dubai Gold & Commodity Exchange (DGCX).

Around two million tonnes of steel bought at a price of about $1,500 a tonne is currently in stock or being transported to the UAE, John Short told the Middle East Steel 2008 conference, MEED reported on Sunday.

“There is about 1.2-1.4 million tonnes in the market, 250,000 tonnes in the port and another 250,000 tonnes on its way,” he said.

“This was bought at or around the peak prices we saw in the second quarter. So we have probably got in excess of $1 billion of losses in steel that will soon be monetised.”

“This is a steel problem,” added Short. “It is a big problem for the banks as well. The system will face some problems in the next few months.”