Brazilian steelmakers remain optimistic regarding the growth prospects for domestic steel consumption. Import penetration is relatively low. Nonetheless, the Instituto Nacional dos Distribuidores de Aço (Inda) reports that, in January 2019, domestic finished steel sales are expected to total 264,000 tonnes – down 7.0 percent, compared with last year’s figure. Distributor and service centre inventory levels, at the end of December 2018, stood at 939,400 tonnes, equivalent to 5.5 months of sales.
The outlook for the Russian steel market is unchanged. Distributors are holding off purchasing to see how demand develops, citing anxieties regarding the new VAT rate (20 percent) and weakening economic fundamentals. Nevertheless, pipe and tube fabricators are optimistic. They are forecasting firm demand, from the construction and energy industries, at the end of the country’s inhospitable winter season (in mid-April). Overseas business is competitive.
Weak purchasing activity prevails, in India, after the year-end holiday break. Local service centres are reviewing their inventory levels and are very cautious about order placement, as a result. Furthermore, price competition in the long products market is forecast to intensify ahead of the interim budget, on February 1, 2019. Third country flat product import offers are available, but buyers show little interest.
In January, Chinese traders have been more cautious in their operations. Similarly, end-users are adopting a wait-and-see approach. Reduced production rates are expected in the run up to the forthcoming Lunar New Year festival season. Meanwhile, the Ministry of Ecology and Environment (MEE) stressed that it would not relax environmental protection targets, in 2019. Export business opportunities are poor, at present.
In Ukraine, purchasing activity is weak. Service centres resumed trading, on January 8. Exporters cut their selling figures, weighed down by a fall in the cost of billet and slab, and the increased availability of Chinese finished steel products in the market. The local association of metal producers, Metallurgprom, reported that finished steel production, in December 2018, totalled 1.519 million tonnes – up 3.1 percent, month-on-month.
The business climate in Turkey is unchanged since our December report. Slow construction activity is curbing buying interest in the country’s main cities. Buyers exercised caution in the period surveyed, noting unfavourable economic fundamentals. Exporters have expressed concerns about their ability to sell the full range of products overseas – preferring to focus on wire rod, rebar and hot rolled coil.
United Arab Emirates
Demand in the United Arab Emirates, in general, is flat, with minimal signs of growth. Buyers at service centres are extremely reluctant to purchase material, in what they deem, as precarious trading conditions. Export opportunities are limited outside the GCC region.
Negative price expectations are gaining momentum, in South Africa, fuelled by political uncertainty and waning economic fundamentals. Bearish stockists are reluctant to sign contracts with the mills, at the moment. We note a reluctance on the part of end-users to commit to forward orders.
Purchasing volumes, in Mexico, are forecast to be stable, at best, in the next trading period. 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. Construction activity in the public sector is subdued.