MOSCOW: Unrest in Egypt has hit construction steel prices, with spot rebar in Saudi Arabia’s Jeddah now at $640-$650 per ton, as Black Sea mills seek new markets away from the turmoil, a major Russian producer said.
"It is influencing the market," Hamriyah General Director Shukhrat Nishanov told Reuters in an interview on Thursday at the Adam Smith CIS Metals Summit in Moscow.
"If that market was traditionally supplied by our colleagues in Turkey and Ukraine, well, they can’t sell there so they are going to the Saudi market and this is disrupting our business."
Metalloinvest’s Hamriyah, the only Russian-owned steel plant in the United Arab Emirates (UAE), sold its January rebar production for $700 per ton, Nishanov said, roughly 8 percent above the current spot range.
The company, which is also Russia’s largest iron miner, opened its steel plant in the UAE last year to tap into the Middle Eastern construction boom.
It currently produces 80,000 tons of rebar per month, or 1 million tons per year. This can be ramped up slightly to about 1.2 million tons if demand increases.
Metalloinvest, controlled by billionaire Alisher Usmanov, may also add a second mill later in the decade, though it has yet to take a final decision.
It already operates two major steel plants in Russia.
Revolutionary market
Egypt is one of the major buyers in the Middle Eastern and North African steel market, which consumes about 62 million tons annually, according to a presentation given by Alam Steel senior trader Hadi Hami at the conference.
Hamriyah does not sell any steel directly to Egyptian buyers, Nishanov said.
"We export 30 percent to Saudi Arabia, 20 percent to Iraq, and our trading partners sell to other buyers in the Persian Gulf, and 10-15 percent is sold to local firms," he said.
He does not expect the Egyptian market to revive until there is more certainty about the country’s future political course.
Egypt is under military rule during a transition period which could last about six months until parliamentary elections are held following the revolution that ousted long-serving president Hosni Mubarak.
The protests have also had a widespread impact on the Egyptian economy. The stock market has been closed since Jan. 27, banks are shut and manufacturers and steel producers have been hit by strikes.
