Tag Archives: Developing Markets

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.

Uncertainty Dampens Trading Activity in Emerging Steel Markets

Difficult trading conditions persist in Brazil. Buyers started to push for lower prices, in view of the downward movement being witnessed in other global steel markets.

Russian steelmakers are under pressure to lower plant utilisation rates to support transaction values. Market fundamentals remain weak. Local trading houses are booking for only immediate requirements due to price fluctuations and working capital problems. Shipments to tube fabricators, OEMs and mechanical engineering companies continue to underperform expectations.

Business sentiment deteriorated in India. Stockists operating in states, adjacent to the Bay of Bengal, witnessed a fall in business activity with the onset of the monsoon season. Meanwhile, steel manufacturers hoped that steady pricing, in July, will persuade customers to place orders rather than postponing purchasing decisions.

The Ukrainian market is slow ahead of the summer vacations. Order intake at the mills is very subdued, with few deals being concluded. Transaction figures fell as producers became eager to book business.

Procurement activity in Turkey is forecast to pick up after the holiday period. However, cautious service centres are booking for only immediate requirements, in anticipation that the revival will be short-lived. The third quarter is usually a slow season for the local steel industry

The United Arab Emirates market is very quiet, with no business activity of any significance taking place during the holy month of Ramadan. Domestic producers continually speak of higher prices but they are flexible when there is business to place.

Source: MEPS – Developing Markets Steel Review – June 2017 Edition

STEEL PRICES RISE IN EMERGING MARKETS DESPITE SUBDUED BUYING ACTIVITY

According to MEPS, Brazilian service centres are concerned that the latest domestic price levels are not supported by market and economic fundamentals. Presently, most firms are purchasing material only on a requirement basis.

Challenging business conditions persist in the Russian Federation. Trading houses expressed bearish views over the growth prospects for domestic steel consumption in the February-April period.

The outlook for the Indian steel market is unchanged. Distributors remain divided about the government’s decision to extend the minimum import price (MIP), which elapses on February 4. Currently, nineteen products are covered by the framework.

Ukrainian steelmakers are divided over the growth prospects for the long products segments in 2017. In the past twelve months, underlying demand for finished steel products has consistently fallen short of industry projections – particularly, from construction firms and pipe fabricators.

Business confidence deteriorated in Turkey, this month. Local stockists contend that the re-emergence of price volatility in domestic quotations has made it a high risk to complete deals at this stage. The situation has been exacerbated by the strength of the US dollar against the Turkish lira and weak economic fundamentals.

The trading environment is unchanged in the United Arab Emirates. Local service centres are extremely reluctant to purchase material in what they deem as precarious business conditions.

South African distributors plan to persevere with conservative procurement strategies, next month. Shipments to the construction and infrastructure projects remain scarce. End-users intend to steer clear of substantial flat product purchases in the interim.

The outlook for the Mexican steel market is unchanged. Flat product spot market sales decreased. Bearish buyers are reluctant to purchase at current transaction values. The strong US dollar against the Mexican peso is also having a negative effect on sales.

Source: MEPS – Developing Markets Steel Review – January Edition

DEVELOPING MARKETS STEEL PRICE ROUNDUP FROM MEPS

Brazilian distributors have condemned the latest upward mill price offers given the current trading climate. They are forecasting an upturn in import tonnages as a result.

The business climate in the Russian Federation remains arduous. Trading houses are divided over the outlook for domestic steel quotations in the September-October period.

The trading environment is unchanged in India. Stockists plan to postpone purchases until the pricing scenario is more transparent. We note little appetite for purchasing at present amongst construction firms. Importers remain highly critical of the government’s decision to renew its minimum import price mandates and instigate new provisional safeguard duties.

Chinese traders plan to persevere with cautious procurement strategies, next month, despite it traditionally being the peak season for steel consumption. The majority stress that the recent upward trend in domestic mill transaction values is unsustainable and does not reflect real demand. Support from export customers is mixed.

Ukrainian steelmakers struggled to adapt to the current domestic trading environment. Shipments to industrial companies, in August, were weaker than forecast, particularly to tube and pipe fabricators.

In Turkey, the domestic steelmakers failed to enforce price rises in weeks 31 and 32, despite a speculative rebound in the cost of ferrous scrap and billet. End-user groups are only purchasing material for immediate needs.

Demand for construction steel in the United Arab Emirates remains muted. Domestic steelmakers are finding it difficult to obtain a satisfactory price for their September rolling campaigns. Risk-adverse traders plan to retain minimum inventory in the interim.

Underlying demand in South Africa has weakened and shows no signs of picking up in the near future. End-users remain adamant that local price quotations are too high.

Buying sentiment is unchanged in Mexico. Stockists intend to maintain their conservative inventory levels and closely monitor the domestic/import price premium. The recent depreciation of the national currency against the US dollar has only exacerbated the situation. The National Chamber of Iron and Steel Industry (CANACERO) has welcomed the Ministry of Economy’s decision to set antidumping duties on wire rod and coated flat steel imports.

Source: MEPS – Developing Markets Steel Review – August Edition

DEVELOPING MARKETS STEEL PRICE ROUNDUP FROM MEPS

According to MEPS, the business environment remains challenging in Brazil. Domestic distributors are extremely reluctant to purchase material in, what they deem as, tricky market conditions.

Price volatility has restricted buying activity in the Russian Federation. Local trading houses have questioned the necessity of the latest round of price hikes. The majority of steel users believe that the latest initiative is unjustified and not supported by underlying demand.

The outlook for India is unchanged. The Joint Plant Committee (JPC) has reported that domestic finished steel consumption in the first eleven months of the fiscal year ending March 2016, totalled 65.93 million tonnes – up 3.6 percent compared with the corresponding period in the previous fiscal year.

The second quarter is expected to be a difficult trading period for the Ukrainian steel industry. The local association of metal producers, Metallurgprom, has forecast that finished steel production in May will reach 2.2 million tonnes – up 0.1 percent compared with March’s daily output.

Business sentiment remains tepid amongst Turkish traders. The majority are worried that their domestic suppliers will ignore market conditions and continue to issue double digit price increases.

Procurement activity remains slower than expected in the United Arab Emirates. Local traders are tightly controlling inventory levels. Purchasing attitudes have been unsettled by the aggressive pricing strategies adopted by foreign suppliers. Emirati rolling mills raised their selling figures for June and July’s production.

The business climate in the Mexican steel market is unchanged. Local distributors are wary of holding too much inventory over the next two months, fearing a price correction.

Source: MEPS – Developing Markets Steel Review – April Edition

DEVELOPING MARKETS HIGHLIGHTS – FROM MEPS INTERNATIONAL LTD

Brazilian steelmakers attempted to push through a price increase for October’s production campaign. Predictably, distributors and end-users have been reluctant to commit to forward orders.

Russian trading houses remain adamant that the latest initiative to advance flat product transaction values does not reflect real demand. Meanwhile, long product steelmakers have again delayed releasing their November basis quotations.

Negative price expectations have gained momentum in India. Local steelmakers are faced with a dilemma of whether to attempt to ride out the difficult domestic trading conditions, or downgrade planned production targets. Meanwhile, the Chinese steel market remains unsettled. Distributors and downstream industries plan to avoid holding or building inventory in the interim.

Ukrainian finished steel prices have continued to trend downwards. The local association of metal producers, Metallurgprom, has forecast that crude steel production in November will reach 2.06 million tonnes – up 1.9 percent compared with September’s output.

Turkish steelmakers have struggled to adapt to October’s unpredictable business environment. Local steel traders are booking material for only short term needs, in anticipation of continuing price reductions.

Procurement activity in the United Arab Emirates was less vigorous, this month, than in September. Local stockists have been wary of finalising purchases in a falling market. Meanwhile, rolling mills opted to reduce their selling figures owing to the difficult market conditions and strong price competition from foreign sources.

Weak underlying demand remains a constraint on Mexican steelmakers’ ambitions to lift transaction values. Meanwhile, the National Chamber of Iron and Steel Industry (CANACERO) has welcomed the government’s decision to impose a temporary 15 percent import tariff on five steel products – including cold rolled coil and wire rod. This measure will be in place for a period of six months.

Source: MEPS – Developing Markets Steel Review – October Edition