Low Seasonal Demand Impedes Price
Growth in The Emerging Steel Markets
The prognosis for the
Brazilian steel market is unchanged. Distributors plan to persevere with
conservative inventory levels, reflecting a seasonal slowdown in end-user
demand. Shipments to companies in construction related activities is weak. Price
support from export demand is limited.
In Russia, steel consuming engineering and manufacturing firms are reluctant to
increase production capacity in the absence of sustainable end-user demand.
Construction-related sales are fragile. Traditionally, the Russian market is
quiet during the summer vacation months.
The Indian steel market is described as “slow”. The business climate is being
negatively affected by the monsoon season. Distributors see no indications of an
imminent pickup in demand. Pressure is growing, for these firms, to liquidate
inventory, to minimise potential losses. Building activity is muted and unlikely
to improve, due to heavy rainfall and flooding. The mills are targeting overseas
markets to offload their surplus output.
Difficult trading conditions persist, in China. Service centres are still
reluctant to conclude contracts. Weak end-user demand is offsetting the impact
of a new round of production restrictions, in several parts of the country.
Heavy rainfall is also curbing construction related activity.
Ukrainian steel demand is tepid – weighed down by the country’s parliamentary
elections. Construction-related activity is slow. The export market is very
competitive. The local association of metal producers, Metallurgprom, reports
that finished steel production, in June 2019, totalled 1.5 million tonnes – down
13.8 percent, month-on-month.
Turkish service centres and steel traders are wary of carrying too much
inventory during the summer months. They note that it is risky to conclude any
deals, at present, because of instability of the Turkish lira against the US
dollar and volatile import price quotations. The slowdown in the real estate
market is a growing concern. Meanwhile, shipments to automotive part
manufacturers are forecast to decline next month, owing to scheduled summer
maintenance work. Demand from overseas customers is weak.
Procurement activity is lethargic, in the United Arab Emirates. Distributors are
booking for only immediate requirements. Inventories are low-to-normal. MEPS’
research reveals no discernible improvement in downstream demand. Traditionally,
construction related activity is limited by the hot weather conditions in August
and September. Export opportunities are restricted outside the GCC region.
Business sentiment is lacklustre, in the South African steel market. Domestic
buyers remark that their suppliers’ current initiatives to lift prices are
ill-timed and counterproductive. Any further price hikes are forecast to be
modest, due to underlying weakness in downstream demand and relatively high
The outlook for the Mexican steel market is unchanged. Producers considered
implementing a domestic price advance, but, so far, this has not proved
possible. Independent stockists opted to defer purchasing activities, finding
the current pricing environment unworkable. Import offers from third country
suppliers are, generally, considered uncompetitive, when compared with the
prices that can be negotiated with local mills.
Source: MEPS -
Steel Review - July 2019 Issue
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