Steel prices in the UAE increased by 12.5 per cent since March to record-high Dh4,500 per tonne.
And an increase in regional steel production will have no impact on the soaring steel prices in the country, as the construction boom and cost of raw materials will only result in further rise, said traders.
Meanwhile, a report published by Meed forecasts dramatic growth in the steel industry in the region. Despite only accounting for two per cent of the global steel trade, the Middle East steel industry is undergoing rapid expansion to meet the needs of the fast expanding construction sector, said Middle East Steel 2008 report.
Middle East produced 21.1 million tonnes of raw steel in 2006 and consumed 41.6 million tonnes of finished goods. The production is expected to rise to 35 million tonnes and consumption to 60 million tonnes of finished by 2010.
Rizwan Sajan, chairman of Danube Building Materials, told Emirates Business the increased supply will not be enough to bring down the soaring price.
"Firstly the price of scrap is going up. Raw materials, such as billets, have become more expensive and in the UAE there is a massive demand for steel. It would be wrong to assume that the price rise is due to non-availability or shortage of steel," said Sajan, who deals with construction materials, such as steel, glass and timber.
Shyam Bhatia, Chairman of Alam Steel, said: "Gone are the days when raw materials used to determine the cost of the finished product.
"Today, because steel is high in demand, suppliers of scrap, especially from Turkey, CIS and Europe, are increasing the prices."