Category Archives: Emerging Markets Steel Prices

Economic Uncertainty Weighs Down The Emerging Steel Markets

Steel demand softened, this month, in many of the emerging steel markets surveyed by MEPS. Distributors are cautious to purchase material, due to uncertainty in both future steel price trends and wider economic conditions.

Brazil

The prognosis for the Brazilian steel market is unchanged. Steel demand is tepid. Several small price advances were noted, compared with September’s numbers. Buyers feel that current transaction values are unjustified, although the steelmakers are claiming higher figures for next year. The current inflated mill prices are proving problematic for independent distributors who are having difficulties in passing on the increases to their customers.

Russia

Russian steel producers are divided over the prospects for domestic steel consumption in the remainder of the final trimester. Service centres are eager to reduce their stocks, concerned that sales activity will be lacklustre, in this period. Construction-related steel demand is slowing down. This trend is expected to continue, as unfavourable weather conditions take hold across the country. Exporters cut prices further, to gain overseas business.

India

In India, orders, for the local mills, are not expected to improve, significantly, in the near term. Service centres are reluctant to commit to forward orders, anticipating reduced domestic mill prices, during the Festival trading cycle (October to November). Construction activity is limited. Meanwhile, ArcelorMittal is reported to be the preferred buyer of Essar Steel, subject to restrictions and approval by the National Company Law Tribunal.

China

Chinese stockists are cautious about the strength of underlying consumption in the November-December period. Several firms are only booking material for short-term needs, citing concerns over further price volatility, and the impact of impending government production cuts and rules on pollution. Support from external demand is limited, hindered by antidumping measures in overseas markets.

Ukraine

Business confidence is tepid, in Ukraine. Distributors are buying only what they need to cover immediate orders. They are wary of carrying too much inventory into the country’s winter trading cycle. Price support from foreign demand is limited. The local association of metal producers, Metallurgprom, reported that finished steel production, in September 2018, totalled 1.57 million tonnes – up 3.0 percent, month-on-month.

Turkey

Arduous trading conditions persist, in the Turkish steel market. End-user demand for finished steel products is subdued, while purchasing activity by stockholders is weak. MEPS is forecasting additional price concessions from domestic suppliers next month.

UAE

The Emirati steel industry is struggling to adapt to the unpredictable business environment. Distributors plan to persevere with conservative purchasing strategies, in November, citing the ongoing uncertainty surrounding future industrial activity and a lack of investment in construction.

South Africa

Downstream demand for finished steel, in South Africa, fell short of market projections. Stockists and traders report that profit margins are being squeezed. With prices continuing to move up, they are only buying for current demand. Traditionally, key consuming industries shut down for a four-week period in mid-December.

Mexico

Procurement activity in Mexico was less vigorous, this month, than in September. Service centres believe that further price cuts are inevitable, citing a slowdown in construction activity. MEPS notes minimal speculative purchasing. In general, inventories are in balance. Meanwhile, the National Chamber of Iron and Steel Industry (CANACERO) is adamant that it is imperative, for the new government, to obtain exemptions from both U.S. steel import tariffs and Canadian import safeguards.

Source: MEPS Developing Markets Steel Review – October Issue

EU Steel Prices Slip in October as Sentiment Fades

Business Confidence Deteriorates in Several Emerging Steel Markets

Turkey

Business sentiment is deteriorating, in Turkey. Domestic steelmakers pushed for price increases, this month, to offset the depreciation of the local currency against the US dollar. However, steel-consuming engineering and manufacturing firms are reluctant to increase production capacity in the absence of sustainable end-user demand. Sales to the construction sector is subdued.

Brazil

Procurement activity in Brazil is lethargic. MEPS detects little evidence of an imminent upturn in end-user demand. New public works contracts are scarce. Bearish local traders stress that sales volumes are forecast to be stable, at best, in the short term. Consequently, they are unwilling to build inventories, at present.

Russia

Challenging trading conditions persist, in the Russian Federation. Local steelmakers indicated to their customers that further upward price adjustments are likely if input costs continue to rise. The situation is exacerbated by the weakness of the local currency. Several bearish trading houses are now destocking, using the current high transaction values, to boost profit margins.

India

The business environment is improving, in India, owing to the imminent end of the monsoon season. Nonetheless, buyers remark that the recent upward trend in domestic mill transaction values is unsustainable and does not reflect real demand. As the month progressed, the gap between domestic offers and bids made it difficult for any new transactions to be concluded. Traditionally, sales volumes begin to improve from mid-October onwards.

Ukraine

The trading climate remains challenging in Ukraine. Stockists are highly critical of the pricing strategies being employed by their flat product suppliers. Support from offshore buyers is restricted.

UAE

The trading environment remains challenging, in the United Arab Emirates. Local trading houses are in little hurry to replenish their stocks. They are uncertain about the future prospects for industrial activity and construction work, in October. Export opportunities remain limited outside the GCC region.

South Africa

South African distributors are booking for only immediate requirements, citing deteriorating economic fundamentals. They contend that the latest price initiative undertaken by ArcelorMittal South Africa (AMSA), for October deliveries, would escalate import tonnages.

Mexico

The prognosis for the Mexican market is unchanged. Domestic stockists are optimistic that trading volumes of finished long products will increase in November. Heavy rainfall slowed down construction activity, this month. Buyers contend that current price levels are unsustainable and that a correction is inevitable.

Uncertainty and Price Volatility Unsettle the Emerging Steel Markets

Brazil

Brazilian distributors are extremely reluctant to purchase material in, what they deem as, precarious business conditions. End-user groups are acquiring material only for their short-term needs. Price support from export demand is negligible. The Instituto Aço Brasil (IABr) reports that, in July, domestic production of finished steel totalled 1.903 million tonnes – up 2.7 percent compared with the previous year’s figure. Meanwhile, steel imports increased by 1.1 percent, year-on-year, to 177,000 tonnes.

Russia

Russian steel producers are divided about the prospects for domestic steel consumption in the final four months of 2018. Bearish trading houses are booking for only immediate requirements, citing the uncertainty about whether industrial activity and construction work will improve. Project completion is usually expedited before the onset of the winter.

India

Purchasing volumes in India are forecast to be stable, in the next trading period. Potential customers are staying out of the market. Price volatility is hampering trading. Stockists are forecasting that sales volumes will begin to improve from mid-October onwards.

Ukraine

Ukrainian steelmakers are expected to push for price increases next month, despite mediocre demand from pipe fabricators and the construction sector. Distributors are postponing forward procurement decisions, owing to their tepid sales and tight cash flow.

Turkey

The economic crisis is escalating in Turkey. MEPS notes little appetite for purchasing, at present, among manufacturing and construction firms. Producers failed to stabilise transaction values for both flat and long finished steel products. Downward price pressure is being exacerbated by weakening market fundamentals and the depreciation of the Turkish lira against the US dollar. Sales to end-users and distributors are forecast to be tepid, in September.

UAE

Buying activity in the United Arab Emirates is weaker than forecast, this month. Service centres are reluctant to purchase material, citing volatile import price quotations and the Eid al-Adha holiday. Export opportunities are limited outside the GCC region.

South Africa

The prognosis for the South African steel market is unchanged. The likelihood of improvement, in the fourth quarter, is minimal. Steel-consuming engineering and manufacturing firms are reluctant to increase production capacity in the absence of a sustainable upturn in end-user demand. Stockists reiterate that their suppliers’ plans to lift prices, for September deliveries, are counterproductive and would result in an escalation in import tonnages.

Mexico

Mexican steel traders report that domestic material is overpriced. The majority of these firms plan to closely monitor the domestic-import price premium before deciding their source of supply. Similarly, end-users remain hesitant about purchasing at current market price levels.

 

Source: MEPS Developing Markets Steel Review

 

Global Steel Prices Stabilise Amid Uncertain Outlook

Slow Seasonal Demand and Trade Sanctions Affect Steel Prices in Emerging Markets

Mexico

Mexican steelmakers continually pressed for increased prices, in July, but mills offered a degree of flexibility and discounting when deals were finalised. The recent depreciation of the national currency against the US dollar has exacerbated the situation. Meanwhile, the National Chamber of Iron and Steel Industry (CANACERO) lobbied the new government for tougher measures to protect the manufacturing and steel industries from foreign competition. The previous Peña Nieto administration imposed commercial import duties on US goods totalling US$3 billion.

Brazil

Brazilian steelmakers struggled to raise transaction values to distributors, in July. End-users remain risk averse. The majority plan to continue with cautious purchasing strategies. Price support from export demand is limited.

Russia

Russian trading houses plan to persevere with conservative inventory levels, reflecting a seasonal slowdown in end-user demand. They expect domestic suppliers will concede further price reductions, to fill their rolling schedules. Meanwhile, Russian steelmakers criticised the European Union’s decision to impose restrictions on imports of steel goods, this month.

India

Demand is tepid throughout India. Sales volumes have slowed in the country’s northern and central states. Stockists operating in these regions have begun to offer discounts to facilitate deals. Traditionally, the monsoon season ends in September. Both primary and secondary steel producers were wary to offer price reductions and more favourable payment terms, fearing such measures would be counterproductive.

Ukraine

The Ukrainian steel market is described as “steady but slow”, as the summer commences. Manufacturing activity has improved, although businesses are still reluctant to invest. The mills are targeting overseas markets to offload their surplus output.

Turkey

Difficult business conditions persist in Turkey. Producers would like to implement a domestic price advance, citing the depreciation of the Turkish lira against the US dollar and rising international prices, but, so far, this has not proved possible. Sales to end-users and distributors remain tepid.

United Arab Emirates

Emirati service centres are wary of carrying too much inventory during the summer months. They note that it is risky to conclude any deals, at present, because of volatile import price quotations. Moreover, sales volumes are forecast to decline further, in August and September, as warmer temperatures are likely to curb construction activity. Export opportunities are limited outside the GCC region.

South Africa

The South African market is very quiet, with little business activity of any significance taking place during the holiday period. Domestic buyers remark that their suppliers’ current initiatives to lift prices are ill-timed, counterproductive and would only escalate import tonnages. We note little appetite for purchasing, at present, among construction firms. Labour unrest and union difficulties add to the uncertain climate.

Source: MEPS Developing Markets Steel Review

Temporary Safeguard Measures Unsettle EU Steel Market

Section 232 Continues to Cast a Shadow Over Emerging Steel Markets

Brazil

Brazilian steelmakers are optimistic about the strength of domestic consumption in 2018, highlighting improving market fundamentals in both the local and global steel markets. Additionally, Brazilian exports to the United States are temporarily exempt from measures related to the Section 232 investigation.

Russia

Negotiations in the Russian Federation remain arduous. Trading houses continue to be frustrated with the pricing positions adopted by their domestic suppliers. The latest initiative is viewed as unwarranted and not supported by underlying demand.

India

The Indian steel industry is forecasting that underlying demand will remain strong until mid-June, supported by government infrastructure spending and strengthening consumer demand. Nonetheless, MEPS notes growing resistance from end-users to the recent price increases. Moreover, the Modi government signalled it planned to formally lodge a trade dispute against the United States, at the World Trade Organisation (WTO), if the Trump administration does not exempt Indian steel goods from rising tariffs.

Ukraine

Supply chain participants report no changes to business activity, in the Ukrainian steel market. Stockists are concerned about carrying too much inventory over the next two months, fearing a downward price correction. Export activity is stable, with prices under renewed negative pressure following developments in the Chinese market.

Turkey

End-user demand in Turkey is tepid, disrupted by Mustafa Kemal Atatürk (National Sovereignty and Children’s Day), and renewed political uncertainty. Presidential and parliamentary elections are scheduled for June. The depreciation of the Turkish lira against the US dollar further exacerbated the situation. Scrap brokers predict that the domestic mills will try to push scrap prices down again in the near future, as both export and local demand remains slow.

UAE

Challenging business conditions persist, in the United Arab Emirates. Distributors are adopting a “wait-and-see” attitude, expecting purchasing activity to slow down ahead of the festive month of Ramadan. However, the outlook for the remainder of 2018 is positive, after the announcement of new commercial, residential and infrastructure projects, in Dubai and Abu Dhabi. Outside the GCC region, export opportunities are limited.

South Africa

South Africa’s Department of Trade and Industry (DTI) failed to persuade the US government to exempt the country’s steel and aluminium exports, from the tariffs, stipulated in the Section 232 proclamation. In further submissions, the ministry proposed a settlement based on 70 percent of the 2017 exports as a quota to the US. South Korea negotiated a similar quota arrangement with provisions, in late March.

Mexico

Mexican steel traders retain a cautious outlook for the second quarter. Downstream buying activity is unsettled by the aggressive pricing strategies adopted by domestic suppliers. Moreover, developments across the border in the United States continue to be watched carefully. Meanwhile, the National Chamber of Iron and Steel Industry (CANACERO) pressed the government for additional measures to protect the domestic manufacturing and steel industries from foreign competition.

Section 232 Reservations Unsettle the Emerging Steel Markets

The trading climate in the Brazilian steel market is unchanged since our February report. Risk-averse traders plan to retain minimum inventory in the interim, highlighting that the recent upward trend in local mill transaction values is unsustainable.

The business environment is challenging, in the Russia. Distributors conveyed frustration with the price increases proposed by their domestic suppliers. The latest initiative is viewed as unjustified and is not supported by underlying demand. We note a reluctance on the part of end-users to commit to forward orders.

Challenging trading conditions persist, in India. Bearish stockists are reluctant to sign contracts with the mills at the moment. Uncertainties persist regarding the sustainability of the latest price increases. Correspondingly, end-users are adopting a wait-and-see approach.

The trading atmosphere is unchanged, in Ukraine. Stockists plan to postpone purchases until the pricing scenario is more transparent. We note little appetite for purchasing at present amongst construction firms.

In Turkey, buyers are reluctant to purchase as they would like to get a clearer picture of the market. Speculation is rife that local steelmakers will persevere with aggressive pricing positions, in April. Meanwhile, Turkish exporters conveyed disappointment after the US Department of Commerce released its wire rod investigation findings. Wire rod products from Turkey were found to have received countervailing subsidies from the government.

Business sentiment is unchanged, in the United Arab Emirates. Distributors are holding off purchasing to see how demand develops. Moreover, Emirati rolling mills kept selling figures unchanged for April’s production programme. Export opportunities remain limited outside the GCC region.

South Africa’s Department of Trade and Industry (DTI) has stressed that the country’s steel and aluminium exports do not represent a threat to either US industry or jobs. As a result, the DTI made a formal submission for exemption status, in accordance with the Section 232 proclamation. Meanwhile, the South African Iron and Steel Institute (SAISI) and the Steel and Engineering Federation of Southern Africa (SEIFSA) highlighted that the exclusion from the US market put an estimated 310,000, steel related, jobs at risk.

In Mexico, distributors and service centres struggle to adapt to the unpredictable business environment. The majority are booking for immediate requirements only, due to continuing price fluctuations. The National Chamber of Iron and Steel Industry (CANACERO) welcomed the US government’s decision to temporarily exempt Mexican steelmakers from the Section 232 import tariff. However, the association expressed concern that the exemption is not permanent, and is being used as part of the re-negotiation of the North American Free Trade Agreement (NAFTA).

Source: MEPS – Developing Markets Steel Review – March 2018 Edition