Dubai: Global prices of steel are rising again after suffering one of the worst shocks in recent history, an industry expert said.
From the peak of the UAE real estate boom in 2008, construction costs have fallen almost 50 per cent due to cheaper raw materials, according to Shyam Bhatia, chairman of Alam Steel, one of the oldest steel distributors in the Gulf.
This, he said, was mainly due to the fall in the prices of raw materials, especially steel.
Demand in the market dropped by about 50 per cent as many real estate projects came to a halt. While there has been some recovery, the market has not fully recovered yet. Very few new projects will come, said Bhatia. But those that are incomplete will gradually resume, he said.
Bhatia said that the liq-uidity crunch brought on by the recession has also been a dampener on the steel distribution industry.
However, with Dubai World's debt issue almost resolved, things will gradually settle down, he said. The conglomerate, which has almost $14 billion in debt, has proposed to restructure payments in a fashion that seems to be better than its creditor banks expected.
Tough time
"The whole industry has gone through a very tough time. We've been set back by about two years [in terms of growth]. The market came down very sharply," he said.
However, while volumes are still suffering, prices have picked up again.
Bhatia said he was very bullish about the steel industry.
"Prices have to go up. They have already gone up by about 25 to 30 per cent and the price now is about $700 per metric tonne," he said.
Raw materials prices are rising sharply and will continue to do so as demand picks up again. Steel prices by year-end will be approximately $900 per metric tonne, Bhatia predicted.
"With the GCC economies spending substantial money on expansion of infrastructure, oil and gas and other key energy projects, steel supply and distribution will play a key role in the local GCC economies in the times to come," he said.
Research by Euro-Monitor says UAE steel and iron exports in 2009 were worth $793 million, down from $898 million in 2008.
The UAE imported $9.55 billion worth of iron and steel during 2009, down from $10.97 billion the year before.
On the production side, 81,000 tonnes of crude steel was produced in the UAE in 2009, down from 90,000 tonnes the year before.
Ezz hikes April prices by 25%
Egypt's largest steelmaker Ezz Steel has raised its prices 25 per cent to recoup soaring raw material costs, it said yesterday.
The firm set its April prices at 4,100 Egyptian pounds (Dh2,735.6) per tonne, up from 3,280 pounds.
The increase comes after an announcement by top global producers Vale and BHP Billiton of changes in their pricing models.
"International raw material prices are going up, and iron ore prices have increased by 90 per cent; therefore steel prices are going up," Kamel Galal, Ezz Steel's investor relations manager, told Reuters yesterday.
