Dubai: Close on the heels of the global meltdown and a projected slowdown in the real estate market, steel prices tumbled to Dh3,000 to Dh3,500 per tonne from a record high of Dh6,000 in June/July, market sources said.
"Prices of steel which had jumped from Dh3,000 in January this year to Dh6,000 in June/July, have declined to close to the January level to Dh3,500 now," Rizwan Sajan, chairman of Danube Building Materials FZ LLC - one of the UAE's largest building materials suppliers, told Gulf News on Monday.
"The latest decline happened in a month's time."
Prices of reinforced bars (or rebars) - widely used in civil construction works - were trading at $1,530 to $1,550 (Dh5,680) per tonne in July, up from $750 per tonne in January, according to Mesteel, an online steel trading portal.
The price of rebars fell to $1,000 per tonne in September on excess supply from August prices of $1,400, the Mesteel price index shows.
The UAE's construction sector, which largely relies on imported building materials, is vulnerable to global shocks and global demands and transportation costs. Stability in prices of steel, cement and white woods are particularly critical to the industry. Turkey, Korea and China are major sources of steel in the UAE. A slowdown in India and China's housing market has helped steel prices to come down in recent months.
Market sources attributed this sudden drop in price to excess supply.
The monthly steel consumption in the UAE is estimated at 400,000 tonnes.
"The current stocks are in excess of one million tonnes," Sajan said. "So, there is a stock of more than two and a half months' consumption. This has brought the prices down."
He said steel importers bought a large quantity for the UAE markets earlier this year, when the prices began to shoot up. "A lot of traders put their money in steel and began importing, to cash in on quick and higher returns. As a result, there is now excess supply that has forced the prices to come down," he said.
This comes as good news for contractors as they can secure steel supplies for the next few months at the current low prices.