Price Volatility Erodes Business
Confidence in the Emerging Markets
The business environment
is challenging, in Brazil. Domestic steelmakers attempted to push through a
price increase for October’s production campaign. Predictably, distributors and
end-users are reluctant to commit to forward orders. For the moment, most
purchases are for immediate needs only. Supplies from third country sources are
The trading climate, in the Russian Federation, is demanding. Distributors and
downstream industries plan to avoid holding or building inventory, in the
interim. The, year-end, seasonal slowdown in demand is expected to begin in late
October. Moreover, overseas sales are difficult to secure, forcing producers to
reduce their export quotations.
Business sentiment is deteriorating in the Indian distribution network.
Inventories are marginally excessive, as a result of slow sales to end-users,
who are keeping their stocks as low as possible. Pressure is mounting on
domestic mills to offer additional price concessions to fill their order books.
Support from offshore buyers is limited.
In China, purchasing activity failed to pick up following the National Day
Golden Week vacation period. Many local steel manufacturers announced unchanged
list values for November deliveries. Domestically produced material is readily
available, despite recent output restrictions.
Procurement activity is tepid, in Ukraine. Neither sales nor prices are showing
signs of improvement, as is the norm at this time of year. Service centres are
offering reduced resale prices to their customers in order to lower inventory
levels. Support from external demand is limited. The local association of metal
producers, Metallurgprom, reports that finished steel production, in September
2019, totalled 1.362 million tonnes – down 11.4 percent, month-on-month.
Business confidence is deteriorating, in Turkey. Domestic steel producers are
reluctant to offer additional discounts and more favourable payment terms,
fearing such measures would be counterproductive and only fuel further price
volatility. The situation is exacerbated by the instability of the Turkish lira
against the US dollar, the threat of US trade sanctions and political
uncertainty. Third country import offers are available, but buyers show little
Sentiment is deteriorating in the Emirati steel market. Demand is relatively
subdued, making it difficult for distributors to obtain satisfactory resale
values. End-user groups plan to closely monitor the price premium charged by the
local mills relative to imports, before deciding where to purchase. Availability
of foreign material at the ports is plentiful. Meanwhile, the Gulf Co-operation
Council (GCC) has initiated a safeguard investigation into imports of flat, long
and tubular products.
Difficult trading conditions persist, in South Africa. Service centres and
traders report that profit margins are being squeezed. Many have failed to
recoup the full amount of recent mill hikes. Few deals are being concluded. The
construction sector continues to suffer from a shortage of public and private
The prognosis for the Mexican steel market is unchanged. Demand from end-users
is weaker than usual for this time of year. MEPS’ research found that dealers
are expecting transaction values to soften further next month. Inventories
linger at undesirable low levels, despite modest reductions. Third country
imports are not particularly attractive.
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