Weakening domestic demand caused by the global financial crisis depressed local steel prices by up to 38 per cent in December to extend a downward trend in the previous four months, official figures showed yesterday.
It was the largest decline in steel prices in the local market since they began their plunge in September to reverse a steady upward trend that saw steel prices jump by at least 90 per cent in the first half of 2008.
The Abu Dhabi Department of Planning and Economy (DPE) said the decline in December was mainly a result of the global economic crisis, which has depressed commodity prices, caused credit crunch worldwide and boosted speculation that many projects in the region and elsewhere could be shelved.
In a report sent to Emirates Business, DPE said its monthly building materials index showed there was a decline of between 10 and 38 per cent in the prices of most steel types in December compared with the previous month, while the prices of nearly 62 per cent of the items listed in the index recorded relative stability.
Dealers said the prices of steel and other building materials dropped in Abu Dhabi and all other emirates as the country is passing through a business and economic slowdown caused by a sharp fall in crude prices.
"The economic and construction boom which the UAE has experienced has sharply boosted the number of construction projects in the country and this has led to an increase in prices of building materials, mainly during the second and third quarter of this year," DPE said in its monthly report.
"But prices have started to decline because of the global financial crisis, which pushed the world economy into a relative recession in the last quarter… other factors include slackening demand, higher supply as some traders began hoarding in fear of another price surge in the third quarter and the fact that many consultancy firms have endorsed the use of Chinese steel."
The figures showed twisted steel recorded the biggest decline in price, which tumbled by nearly 38 per cent in December. The price of spiral steel dipped by 10 per cent, while there was a decline of between two and 20 per cent in the prices of some other building materials.
Portland cement prices stabilised at Dh480 in December, but they were far lower than their August level of Dh522, according to DPE.
White wood prices dropped by around two per cent last month, while there was a decline of up to six per cent in the prices of paint.
It was the fifth consecutive month that steel prices in Abu Dhabi declined after a 15 per cent drop in August compared with the previous month.