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Home > MEPS Steel News - 25.09.2019

Purchasing Activity is Lacklustre in The Emerging Markets

The trading environment, in Brazil, remains weak. MEPS’ research indicates resistance to the mills’ pricing initiative from customers. Shipments to automotive suppliers and white goods manufacturers are tepid. Despite this, service centres expect local steel manufacturers to target an upturn in selling values, in the near term. Supplies from third country sources are limited.

The outlook for the Russian market is unchanged. Local consumption is tepid. Buyers are postponing order placement in the hope of reduced prices in the future. They assert that the recent advances are not supported by increased market demand. Inventory levels are high. Traditionally, the September/October period is the last opportunity for these firms to improve their sales performance before the onset of the winter trading cycle.

The business environment is unpredictable, in India. Fierce competition amongst domestic flat steelmakers is providing local buyers with the opportunity to procure material, at below official offer levels. Long product inventories are still above current market requirements. Demand, from the construction sector, is subdued. Delivery lead times are very short. Traditionally, sales volumes begin to pick up from mid-October onwards. Support from offshore buyers is restricted.

Chinese service centres are reluctant to purchase material, citing unattractive domestic price quotations and slow underlying demand during the Mid-Autumn Festival. Meanwhile, the government is expected to announced production cuts and stricter rules on pollution, ahead of the country’s national holiday (Golden Week Holiday – from October 1 to 7).

The trading climate is challenging, in Ukraine. Automotive and construction activity is below last year’s numbers. Distributors are hoping that industrial demand will pick up, in the coming months. The local association of metal producers, Metallurgprom, reports that finished steel production, in August 2019, totalled 1.537 million tonnes – up 1.7 percent, month-on-month.

Business confidence is low, in Turkey. Distributors and traders are sceptical regarding the prospect that buying activity will pick up, in October – citing weak economic fundamentals and subdued underlying demand. The situation is exacerbated by the instability of the Turkish lira against the US dollar and volatile import price quotations. Orders from the automotive sector are below expectations. Price support from foreign customers is limited.

The prognosis for the Emirati steel market is unchanged. Few deals are being concluded. Domestic stockists are optimistic that trading volumes of finished products will increase in November. Buyers are purchasing cautiously as import prices continue to drift downwards. Export opportunities are restricted outside the GCC region.

The trading environment remains challenging, in South Africa. Purchasing is slow. Service centres and steel traders are adamant that current price levels are unsustainable and that a downward correction is inevitable. Building firms are booking for only immediate requirements, citing weak construction activity and a shortage of new state-funded infrastructure projects.

Business sentiment is weak in the Mexican steel market. Domestic steelmakers pushed for price increases, this month, to offset the depreciation of the local currency against the US dollar. Stock levels, particularly at the service centres, are too high for current requirements. Demand from several steel-consuming sectors remains soft – with few signs of any improvement.

   Source: MEPS - Developing Markets Steel Review - September 2019 Issue

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