By Summer Said
Tonne of rebar that fetched around $830 in January now around $860 on strong domestic demand.
Reinforcing steel bar (rebar) prices in the UAE have risen in the past couple of months on strong domestic demand and a pick-up in international billet prices, traders said on Monday.
A tonne of rebar fetched around $830 in January, and was around $860 last week, traders told newswire Reuters.
"Billet prices continued to rise this month, and consequently rebar prices went up," one trader said. "In some places in the country, prices were as high as $880 a tonne."
Steel billets are semi-finished products used in manufacturing rebar.
"I think steel prices are also rising on the rally seen in other commodities assets such as gold, platinum and silver," a Gulf-based analyst said.
"Many in the market know that contractors are keen to finish their projects on time and they would pay what the supplier wants, so they are trying to maximise their profit margin."
Demand for steel in the UAE was 3.5 million tonnes in 2006, according to a report from the Gulf Organisation for Industrial Consulting.
It said demand for iron and steel products in the world's biggest oil exporting region, where more than $1 trillion of infrastructure projects are in the pipeline, would climb 31% to 19.7 million tonnes by 2008.
The UAE economy minister has said the country's steel production will double to 10 million tonnes per year by 2010 as the second-largest Arab economy reduces its reliance on oil.
Some local traders said they were having difficulty finding rebar for stock.
"Some buyers are willing to sell if you are asking for huge orders, but if you are looking for something like 200 tonnes, you have a problem," another trader said.
Consultancy EC Harris has said costs in the UAE, centre of a regional construction boom, could jump by a fifth next year on higher material and labour costs.
It added that costs for materials such as cement and steel could rise 19% during the next 12 months.
In neighbouring Saudi Arabia, Saudi Basic Industries Corporation (Sabic) has cut prices of reinforcing steel by 4.8% to 2,980 riyals per tonne but kept the price of steel bars unchanged, traders said.
The Dubai Gold and Commodities Exchange (DGCX), the Middle East's only commodities bourse, in October launched the first international tradable steel rebar contract in order to allow manufacturers and customers to lock in prices in the steel market, which lacks a transparent global benchmark for setting prices or hedging risk. (Reuters)