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