Challenging Trading Conditions
Persist in the Emerging Steel Markets
Downstream demand for
finished steel products is tepid, in Brazil. Steel production is, so far,
unaffected by the restriction imposed on output from Vale’s iron ore mines.
Stockists are adamant that any move by domestic steel suppliers to pursue price
growth would be counterproductive and stifle what little buying interest exists.
Meanwhile, the Instituto Nacional dos Distribuidores de Ašo (Inda) reports that,
in January 2019, domestic flat rolled finished steel sales totalled 228,600
tonnes – down 19.5 percent, compared with last year’s figure. The association is
projecting that distributor and service centre sales will be stable at best,
Procurement tonnages in the Russian Federation are tepid. Price conscious steel
traders highlight that current transaction values reflect the price demands of
their suppliers rather than market fundamentals. The situation has been
exacerbated by a rebound in prices for export quotations. Distributors are
reluctant to confirm forward orders owing to fears of a weak construction
season. Traditionally, the country’s inhospitable winter season ends in
Indian stockists have been highly critical of the pricing strategies employed by
their domestic suppliers. Mills are concentrating on winning compulsory local
purchases from public sector undertakings. End-users plan to closely monitor the
price premium charged by the local producers relative to imports, before
deciding where to purchase. Project-completion is traditionally expedited before
the end of the current financial year. Conditions in overseas markets are
In Ukraine, buying activity is restricted by seasonal factors and credit
limitations. Service centres are reviewing their inventories and are extremely
cautious about order placement. Traditionally, the construction season commences
in mid-April. Overseas business is very competitive.
Price volatility is eroding market sentiment, in Turkey. Local traders have
questioned the sustainability of the current transaction values – citing that
price support is limited amid low enquiry rates. We note a reluctance on the
part of end-users to commit to forward orders. Speculation is rife that local
steelmakers will push for higher prices, in March. Exporters note that overseas
buyers are reluctant to place orders.
Purchasing volumes in the United Arab Emirates are forecast to be stable, at
best, in the next trading period. State-funded capital projects and
infrastructure spending has been inhibited by the downturn in crude oil
revenues. In March, many buyers at service centres plan to use Asian finished
steel offers as a price barometer to push for lower quotations from their other
Business confidence is eroding in the South African steel market. Construction
activity is flat, with minimal signs of growth. Distributors and traders are
sceptical regarding whether buying activity will pick up, in March. Several of
these firms are facing tight profit margins and working capital problems.
Inventories are quite high for several product types.
Source: MEPS -
Steel Review - February 2019 Issue
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