Economic Uncertainty Weighs Down the
Emerging Steel Markets
The prognosis for the Brazilian steel market is unchanged. Steel demand is
tepid. Several small price advances were noted, compared with September’s
numbers. Buyers feel that current transaction values are unjustified, although
the steelmakers are claiming higher figures for next year. The current inflated
mill prices are proving problematic for independent distributors who are having
difficulties in passing on the increases to their customers.
Russian steel producers are divided over the prospects for domestic steel
consumption in the remainder of the final trimester. Service centres are eager
to reduce their stocks, concerned that sales activity will be lacklustre, in
this period. Construction-related steel demand is slowing down. This trend is
expected to continue, as unfavourable weather conditions take hold across the
country. Exporters cut prices further, to gain overseas business.
In India, orders, for the local mills, are not expected to improve,
significantly, in the near term. Service centres are reluctant to commit to
forward orders, anticipating reduced domestic mill prices, during the Festival
trading cycle (October to November). Construction activity is limited.
Meanwhile, ArcelorMittal is reported to be the preferred buyer of Essar Steel,
subject to restrictions and approval by the National Company Law Tribunal.
Chinese stockists are cautious about the strength of underlying consumption in
the November-December period. Several firms are only booking material for
short-term needs, citing concerns over further price volatility, and the impact
of impending government production cuts and rules on pollution. Support from
external demand is limited, hindered by antidumping measures in overseas
Business confidence is tepid, in Ukraine. Distributors are buying only what they
need to cover immediate orders. They are wary of carrying too much inventory
into the country’s winter trading cycle. Price support from foreign demand is
limited. The local association of metal producers, Metallurgprom, reported that
finished steel production, in September 2018, totalled 1.57 million tonnes – up
3.0 percent, month-on-month.
Arduous trading conditions persist, in the Turkish steel market. End-user demand
for finished steel products is subdued, while purchasing activity by
stockholders is weak. MEPS is forecasting additional price concessions from
domestic suppliers next month.
The Emirati steel industry is struggling to adapt to the unpredictable business
environment. Distributors plan to persevere with conservative purchasing
strategies, in November, citing the ongoing uncertainty surrounding future
industrial activity and a lack of investment in construction.
Downstream demand for finished steel, in South Africa, fell short of market
projections. Stockists and traders report that profit margins are being
squeezed. With prices continuing to move up, they are only buying for current
demand. Traditionally, key consuming industries shut down for a four-week period
Procurement activity in Mexico was less vigorous, this month, than in September.
Service centres believe that further price cuts are inevitable, citing a
slowdown in construction activity. MEPS notes minimal speculative purchasing. In
general, inventories are in balance. Meanwhile, the National Chamber of Iron and
Steel Industry (CANACERO) is adamant that it is imperative, for the new
government, to obtain exemptions from both U.S. steel import tariffs and
Canadian import safeguards.
Source: MEPS -
Steel Review - October 2018 Edition
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