Looking at the Middle East flats market, the global tightening is also seen to have influenced this region. At the recent Arab Iron and Steel Summit, SteelOrbis observed that producers were talking with optimism about the future and intended to continue to make new investments. Their investments are not only for long products, but also include plans to increase their current flat product capacities. For example, UAE-based rebar producer Emirates Steel is planning to produce 1.1 million mt of plates and 2.4 million mt of HRC annually, besides increasing its rebar production capacity.
Despite all these investment plans, demand for flat products in the Middle East generally continues to be weak for the time being. The most widely consumed flat products in the Middle East at the current time are as follows: HRC (for producing pipe), plate (for construction) and HDG coils (for air condition systems and household goods). Flat product stocks in the Middle East are still at high levels. Although there has been a slight revival as compared to recent months, flat product stocks are still at high levels at stockists. When we look at the 2008 import figures of the MENA (Middle East and North Africa) countries, it seems that the most widely imported materials were rebars and billets, while, of other products, HRC accounted for eight percent of the import total, plate for six percent and HDG coil for four percent. It is expected that these figures will register a decrease as the tightening of demand has been affecting the Middle East since October 2008.
Looking at the export price levels of the North African producers, LISCO's (Libyan Iron and Steel Company) export price levels are currently at around $370-380/mt FOB Libya. Meanwhile, EZDK's HRC price level for June production is at $400/mt FOB Egypt. It is heard that there is sales activity for overrolling and ready stock material to the Middle East countries, and to Egypt in particular. Due to the good quality of the sole Saudi Arabian flats producer's material and since its ready stock price is $60-70/mt lower compared to the new production price, interest in this producer's ready stock material has been increasing. Also, since HDG prices are at high levels in the local Egyptian market, there is import activity from Saudi Arabia for this material.
HRC offers to the UAE are currently at the price level of $380-400/mt CFR UAE, whereas it is heard that commericial plates from India are being offered at $460/mt CFR UAE. Due to the contraction of demand expected in the summer and during Ramadan, stockists and buyers in the Middle East are trying to reach September without taking unnecessary risks. A greater revival of demand may be seen as of the fourth quarter of the year.
Although traders' stocks have started to diminish in the Saudi Arabian market, end-users' flat product stocks are still at low levels. Purchasers are delaying their buying activities as they fear that prices may fall further. Deals currently being concluded are not for stocks, but are for current orders instead. In the Saudi Arabian domestic market, the sales price level for SABIC's new production HRC is at SAR 1,800/mt ($480/mt), the CRC sales price level is at SAR 2,150/mt ($573/mt), while the HDG price level is at SAR 2,800/mt ($747/mt) - all prices are ex-works and have remained unchanged as compared to the previous week. However, it is said that SABIC is making more aggressive discounts compared to before. It is mentioned that there have been some discounts of $60-70/mt based on tonnage size for serious orders. Having gained respect for its quality in the local Saudi Arabian market, SABIC is heard to be taking positions rapidly against competitive import offers in the local market. On the other hand, the producer can only respond to orders for high quality material with June production.
While Russia origin HRC offers were last week at $405-410/mt CFR Saudi Arabia, these offers have this week softened by $15-20/mt. In addition, the current volume of Southeast Asia origin offers is attracting attention. Some revival is observed in offer activity from Taiwan, South Korea and Japan in particular. It is reported that Nippon Steel production 1.2 mm HRC is being offered to Saudi Arabia at $460-470, whereas 2 mm HRC prices in South Korean origin offers have softened to levels of $460-470/mt CFR. In the local Saudi Arabian market, acceptable price levels for SABIC production HRC are $430-450/mt ex-works. Due to the acceptability of these levels and also due to the competitiveness of the Southeast Asian offers, CIS flat product offers have also been revised.
Meanwhile, Taiwan origin HDG offer prices are at $650-680/mt CFR Saudi Arabia, i.e. at higher levels compared to the South Korean and Indian origin offers. Also, it is heard that South Korea origin HDG offers for 1.5-4 mm material can be found as low as $620/mt CFR. On the other hand, it is heard that there are offer prices from Indian producers such as Essar, Jindal and Uttam at competitive levels of $580-600/mt CFR Saudi Arabia.