The ferrous metals market across the Middle East is entering 2026 at a moment of heightened complexity. Global oversupply, shifting trade routes, tightening environmental regulations, and uneven regional demand are reshaping the industry’s fundamentals. While some markets continue to demonstrate resilience, others are grappling with slower growth, price pressure, and structural imbalances. Together, these forces are redefining how ferrous scrap and steel move, trade, and create value across the region. 

At the heart of this evolving landscape are global dynamics that increasingly spill into regional markets. Jawed Ahmed, CEO, Al Qaryan International, describes the current environment as “challenging, uneven, and highly influenced by external forces rather than purely domestic fundamentals.” 

According to Ahmed, ferrous market performance varies sharply from one GCC country to another. “If you look at the UAE, demand remains strong due to sustained construction activity and industrial development,” he explains. “But other GCC markets, including Saudi Arabia and Bahrain, are experiencing slower growth and weaker market sentiment.” 

Saudi Arabia, in particular, is facing headwinds. Despite ambitious long-term industrial and infrastructure plans under Vision 2030, near-term demand for finished steel products has softened. “Saudi is seeing a negative trend in the ferrous market because the demand for finished products is low,” Ahmed notes. This slowdown has translated into cautious buying behavior, pressure on steel margins, and reduced appetite for raw materials in certain segments. 

In contrast, the UAE continues to stand out as a relatively bright spot, buoyed by ongoing construction, infrastructure investments, and diversified industrial demand. 

China’s oversupply and its ripple effects 

Beyond regional dynamics, global developments, particularly in China, are exerting significant influence on Middle East ferrous markets. China remains the world’s largest steel producer, manufacturing over 900 million tonnes annually, accounting for more than half of global steel output. However, geopolitical tensions and trade restrictions have limited China’s access to key export markets. 

“With the U.S. imposing tariffs on a wide range of Chinese steel products, China is struggling to place its material,” Ahmed explains. “As a result, excess production is being redirected into other regions, including the Middle East.” 

This influx of lower-priced steel has had a destabilizing effect. Dumped material depresses prices, squeezes margins for local producers, and intensifies competition in already challenging markets. For Middle Eastern steelmakers, competing against subsidized or aggressively priced imports has become increasingly difficult, particularly in markets with weaker domestic demand. 

Compounding the issue are developments in neighboring countries such as Iran. Ahmed points out that Iran is reportedly selling primary materials, including iron ore and direct reduced iron (DRI), at prices lower than locally available scrap. “When primary materials are cheaper than scrap, it directly undermines scrap demand,” he says, highlighting another layer of complexity facing recyclers and scrap traders. 

UAE’s Structural Advantage 

Despite these pressures, not all markets are equally exposed. The UAE’s ferrous sector has proven more resilient, largely due to its raw material mix. Unlike many regional peers, UAE steelmakers rely predominantly on primary inputs such as iron ore and DRI rather than imported scrap. 

“UAE mills are largely enjoying the ferrous business because they are not dependent on imported scrap,” Ahmed observes. This structural advantage shields the country from volatility in global scrap markets and from supply disruptions caused by policy changes in exporting regions. 

As a result, while global dumping and price competition weigh the wider region, the UAE continues to maintain relatively stable production and demand dynamics. 

Rising scrap demand amid structural constraints 

While market sentiment remains mixed, one clear trend stands out: demand for ferrous scrap across the Middle East is steadily increasing. According to Anshul Gupta, CEO of PGI Group, this rise is driven by expanding steelmaking capacity and a gradual shift toward electric arc furnace (EAF) production.  

“The Middle East ferrous scrap market remains tight on supply while demand from steel producers is rising,” Gupta explains. “This is particularly evident in Egypt, Saudi Arabia, and the UAE, where new steelmaking and EAF capacity is being developed.” 

However, supply constraints persist. While local scrap generation is increasing, it has not kept pace with growing consumption. Moreover, quality remains a key concern. “Many domestic scrap streams are still lower grade than what modern mills prefer,” Gupta notes, forcing steelmakers to rely on imported material or blend scrap with higher-quality inputs. 

Pricing reflects this tension. Regional recycled steel prices, often benchmarked against global indices, have remained stable to firm. As of late January 2026, global scrap prices hovered around USD 375–380 per tonne, with local reports indicating price pull-ups in neighboring markets such as Saudi Arabia. “Demand is outpacing near-term supply growth,” Gupta says, “and prices are supported by both local mill requirements and global pricing references.” 

Policy interventions and export dynamics 

Government policy is playing an increasingly central role in shaping scrap flows. In the UAE, authorities replaced a lengthy export ban with a 400 dirham per tonne export duty on ferrous scrap in 2024. The objective was clear: ensure sufficient feedstock for domestic steelmakers while allowing controlled exports. 

“It supports domestic raw material availability, which is critical for local mills,” Gupta explains. “But at the same time, it increases landed costs in export markets, weakening competitiveness against suppliers from Turkey or South Asia.” 

Local scrap prices have adjusted downward in response, reflecting reduced export attractiveness and a shift toward domestic consumption. “The duty encourages greater scrap retention for UAE production, supporting local steelmaking feedstock security while reducing volumes leaving the region.”  

Europe, CBAM, and the sustainability imperative 

Beyond regional policies, European regulations are set to reshape global scrap trade in the coming years. The EU’s tightening Waste Shipment Regulation (WSR) is expected to restrict exports of scrap classified as waste to non-OECD countries, while discussions around ferrous scrap controls are gaining momentum. 

At the same time, the Carbon Border Adjustment Mechanism (CBAM) is already influencing steelmakers’ procurement strategies. CBAM penalizes high-carbon imports, pushing producers to favor low-emission inputs such as scrap. 

According to Gupta, this creates both opportunity and complexity for Middle Eastern exporters. “If GCC scrap producers can certify quality and carbon intensity to European standards, there is potential to benefit,” he says. “But compliance, classification, and reporting requirements are still evolving.” 

By 2027, exporters to Europe will need to demonstrate compliance with carbon reduction and recycling requirements, making secondary materials not just a sustainability tool but a critical economic lever, says Jawed Ahmed. 

According to Ahmed, CBAM effectively links steel exports to carbon performance. Producers that rely heavily on primary raw materials such as iron ore or DRI will face carbon-related costs when exporting to Europe. Those who fail to reduce emissions intensity risk losing margin and competitiveness. 

Ahmed argues that incorporating recycled content is no longer optional. “If you make a product and want to sell it in the market, buyers want to know how much recycled material is in it,” he says. “And if you don’t use it, you will be penalised.” 

Beyond CBAM, tightening global regulations are also expected to influence scrap flows. “Every country now wants to keep its own resources,” he notes. “They don’t want to export freely because they need to manage their circular economy.” 

With stricter certification requirements and environmental controls emerging across OECD countries, access to secondary raw materials could become more limited. “There will be small quantities available, but a lot of people wanting to buy,” Ahmed says. “That means strong demand.” 

He predicts that by 2028, the market for recycled ferrous metals will become extremely competitive, with recyclers and steelmakers prioritizing scrap acquisition and utilization. 

A strategic shift toward circularity 

For Gopalakrishnan Thiyagarajan, CEO of Crown Industries, these regulatory shifts signal a deeper transformation. “The ferrous scrap market in the Middle East is in a transitional and strategic growth phase,” he says. While Europe’s restrictions may reduce scrap availability and increase competition for high-quality material, they also create strong incentives to develop local recycling ecosystems. 

“Scrap-based steel production has a significantly lower carbon footprint than traditional blast furnace routes,” Thiyagarajan explains. “This aligns with regional sustainability goals and positions the Middle East to build green steel supply chains.” 

He notes that the region is witnessing increased steel production through electric arc furnace and Induction Arc Furnaces routes, driven by infrastructure development, urban expansion, and industrial diversification programs across the Gulf countries. “However, the region remains heavily dependent on imported scrap, especially from Europe, the United States, and CIS countries. Local scrap generation is increasing, but it is still not sufficient to meet the growing demand from steel mills." 

He highlights growing investments in shredding, sorting, and advanced recycling technologies as critical enablers. Countries that strengthen domestic scrap collection and processing will be better positioned to weather supply disruptions and capitalize on sustainability-driven demand. 

He explains that the region can benefit by increasing scrap usage in electric arc furnace and induction steelmaking, which would immediately reduce emissions intensity. At the same time, there is an opportunity to develop integrated green steel supply chains aligned with emerging global sustainability standards. 

“If the region moves decisively,” he adds, “it can position itself as a competitive low-carbon steel production hub for international markets.”  

Bahrain’s emerging role 

Thiyagarajan sees particular promise for Bahrain. With its strong industrial base, excellent port infrastructure, and strategic Gulf location, Bahrain could emerge as a regional scrap trading and processing hub. “With the right regulatory support and targeted investment, Bahrain can serve neighboring markets and play a larger role in regional scrap flows,” he says. 

As industrial activity expands, domestic scrap generation is expected to rise, creating new opportunities for recyclers and traders alike. 

Outlook for 2026 and beyond 

The industry leaders remain cautiously optimistic. Ahmed points to continued global GDP growth, infrastructure spending, electric vehicle manufacturing, and data center expansion as long-term demand drivers for steel and base metals. “All sectors that consume steel, construction, machinery, vehicles, are growing,” he says. “That bodes well for waste metals and steel alike.” “I’m very bullish on all scrap metals, including steel, and hopeful for better business prospects in the Middle East.” 

Anshul notes that “rising scrap consumption with new mills and increased EAF use, along with global decarbonization policies, are positive drivers,” while cautioning that “policy uncertainty, export duties, and limited availability of high-grade scrap could constrain trade dynamics.” Thyagarajan echoes this, stating that the outlook is “moderately positive,” with expectations of “continued growth in EAF and induction-based steel production, stable to increasing scrap demand driven by infrastructure and industrial projects, and a gradual shift toward low-carbon steelmaking practices.” He adds that “ferrous scrap will increasingly evolve from a raw material to a strategic resource for sustainable industrial growth in the region.”  

What unites all perspectives is a shared view that ferrous scrap is no longer just a secondary raw material. It is rapidly becoming a strategic resource, central to decarbonization, circular economy goals, and industrial competitiveness.