- VAT pricing under RCM delayed clear trade direction
- Export activity remained thin with limited spot deal confirmations
UAE scrap prices declined w-o-w by AED 3/t ($1/t) in the week ended 16 January, as market participants remained cautious amid uncertainty over trade direction following the first week of VAT pricing under the RCM implementation.
The processed heavy melting scrap (HMS) index fell AED 3/t ($1/t) w-o-w to AED 1,129/t ($307/t).
Purchase inquiries from major mills remained selective with a wait-and-watch approach. Meanwhile, export offers from the UAE rose by $5-6/t w-o-w- a widening gap between domestic buying interest and export price expectations.
Market comments
According to a representative from a major trading house, pricing clarity remained limited this week, with the market still in a wait-and-watch mode.
“With the new RCM mechanism coming into effect from today (14 January), there are no clear price indications yet. The market is likely to discover the real price by Monday, once trading activity normalises,” the source said.
With the new system coming into effect, fresh price discovery is expected only after 14 January and mostly by next week, as market participants wait for clarity.
DAP Abu Dhabi – Current Indications
- Processed HMS: AED 1,120-1,130/t ($305-307/t)
- Shredded: AED 1,170-1,180/t ($319-321/t)
- PNS: AED 1,140-1,160/t ($310-316/t)
- Pure LMS: AED 950-1,000/t ($259-272/t)
Export market
Export market participants reported a limited number of spot deals from the UAE during the week, though overall activity remained thin. Several traders indicated that no deals were concluded at their end, despite some transactions being heard around the $360/t level.
Market participants noted that workable price levels remain higher, estimated at $365-368/t for EU-origin shredded scrap and $370-375/t for UAE-origin shredded material.
Reported deals during the week:
- HMS (UAE): 500 t at $358/t CFR Qasim
- HMS (UAE): 500 t at $356/t CFR Qasim
- Sheared HMS (UAE): 500 t at $360/t CFR Qasim
- Sheared HMS (UAE): 500 t at $362/t CFR Qasim
Outlook
In the near term, the UAE scrap market is expected to cautious, with limited liquidity as participants adjust to VAT pricing under the RCM framework. Price discovery is likely to resume gradually from next week, once buying interest normalises and clearer benchmarks emerge.
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