Business Confidence Deteriorates in
Several Emerging Steel Markets
Procurement activity in Brazil is lethargic. MEPS detects little evidence of an
imminent upturn in end-user demand. New public works contracts are scarce.
Bearish local traders stress that sales volumes are forecast to be stable, at
best, in the short term. Consequently, they are unwilling to build inventories,
Challenging trading conditions persist, in the Russian Federation. Local
steelmakers indicated to their customers that further upward price adjustments
are likely if input costs continue to rise. The situation is exacerbated by the
weakness of the local currency. Several bearish trading houses are now
destocking, using the current high transaction values, to boost profit margins.
The business environment is improving, in India, owing to the imminent end of
the monsoon season. Nonetheless, buyers remark that the recent upward trend in
domestic mill transaction values is unsustainable and does not reflect real
demand. As the month progressed, the gap between domestic offers and bids made
it difficult for any new transactions to be concluded. Traditionally, sales
volumes begin to improve from mid-October onwards.
The trading climate remains challenging in Ukraine. Stockists are highly
critical of the pricing strategies being employed by their flat product
suppliers. Support from offshore buyers is restricted.
Business sentiment is deteriorating, in Turkey. Domestic steelmakers pushed for
price increases, this month, to offset the depreciation of the local currency
against the US dollar. However, steel-consuming engineering and manufacturing
firms are reluctant to increase production capacity in the absence of
sustainable end-user demand. Sales to the construction sector is subdued.
The trading environment remains challenging, in the United Arab Emirates. Local
trading houses are in little hurry to replenish their stocks. They are uncertain
about the future prospects for industrial activity and construction work, in
October. Export opportunities remain limited outside the GCC region.
South African distributors are booking for only immediate requirements, citing
deteriorating economic fundamentals. They contend that the latest price
initiative undertaken by ArcelorMittal South Africa (AMSA), for October
deliveries, would escalate import tonnages.
The prognosis for the Mexican market is unchanged. Domestic stockists are
optimistic that trading volumes of finished long products will increase in
November. Heavy rainfall slowed down construction activity, this month. Buyers
contend that current price levels are unsustainable and that a correction is
Source: MEPS -
Steel Review - September 2018 Edition
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of Developing Markets' Steel Review