Political Uncertainty Unnerves
Business Confidence in Several Emerging Markets
In Brazil, the Instituto
Nacional dos Distribuidores de Ašo (Inda) reports that, in March 2019, domestic
flat rolled finished steel sales totalled 312,900 tonnes – up 19.0 percent,
compared with the corresponding figure in the previous year. However, the
association is forecasting that both sales and purchases of flat steel will fall
by almost 10 percent month-on-month, in April.
The trading environment is gathering momentum, in the Russian Federation. Flat
product suppliers are now offering material from their scheduled June
production. Bullish distributors are forecasting that sales volumes of finished
long products will increase, in May, remarking that construction activity will
benefit from improving weather conditions. Consequently, domestic ferrous scrap
costs are projected to fall, amid an upturn in collection rates and less
The Indian steel industry is forecasting that underlying demand will remain
tepid, until after the country’s general election campaign is concluded (April
11 to May 19). Traders and service centres are questioning the sustainability of
the current transaction values, specifying that price support is limited.
Traditionally, in this period, government infrastructure spending is on hold and
end-users defer forward orders. Additionally, the Ministry of Steel is reported
to be contemplating expanding the product coverage of “Steel and Steel Products”
(Quality Control) Order. Importers are becoming cautious regarding purchasing
from overseas, as a result.
The outlook for the Ukrainian market is unchanged. Domestic steelmakers reined
in their pricing ambitions, for April business. Underlying consumption has
fallen short of industry projections, after a slow start to the construction
season. Manufacturing firms are finding it difficult to obtain credit, which is
inhibiting their ability to purchase steel products. The local association of
metal producers, Metallurgprom, report that finished steel production, in March
2019, totalled 1.694 million tonnes – up 14.8 percent, month-on-month.
The business climate is fragile, in Turkey. Stockists are concerned about
carrying too much inventory over the next two months. End-user demand is
limited. The situation is being exacerbated by political uncertainty and the
imminent festive month of Ramadan (commencing May 5). Exporters are focused on
developing new business ties in Asia.
Business activity is lethargic, in the United Arab Emirates. Distributors are
reluctant to place new orders, expecting daily operations to slow down, in late
April, ahead of the Ramadan holidays. MEPS’ research indicates that demand for
finished long products, will remain tepid, in the June-August period. Export
opportunities are limited outside the GCC region.
In South Africa, downstream demand for finished steel is growing at a slower
pace than expected. No new state-funded infrastructure or construction projects
will be confirmed until after the general election on May 8. Meanwhile,
ArcelorMittal South Africa is reported to be restarting the electric arc furnace
at its Vereeniging steelworks. The facility was made idle four years ago.
Mexican service centres envisage limited movement in activity in the near term.
Meanwhile, the National Chamber of Iron and Steel Industry (CANACERO) is
lobbying the government for additional measures to protect the domestic
manufacturing and steel industries from foreign competition.
Source: MEPS -
Steel Review - April 2019 Issue
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