Uncertainty and Price Volatility
Dampens Steel Demand in Emerging Markets
Business sentiment is
unsettled, in Brazil. Distributors and end-users are frustrated with the
increased transaction values proposed by their domestic suppliers. The latest
initiative, delayed until July, is viewed as excessive.
The business climate is challenging, in the Russian Federation. Inventory levels
are being controlled, throughout the supply chain. We note a reluctance on the
part of end-users to commit to forward orders. Price support from export
customers is limited.
In India, steel distributors, operating adjacent to the Bay of Bengal, witnessed
a fall in business activity, due to the onset of the monsoon season. We note
little appetite for purchasing at present amongst construction firms. Both
primary and secondary steel producers are reluctant to offer price reductions
and more favourable payment terms, fearing such measures would lead to further
negative price expectations. Traditionally, the monsoon season ends in
The trading atmosphere is unchanged, in Ukraine. Manufacturing activity is still
tepid. Businesses remain reluctant to invest. The export market is very
competitive. The local association of metal producers, Metallurgprom, report
that finished steel production, in May 2019, totalled 1.741 million tonnes – up
4.6 percent, month-on-month.
Demand is tepid throughout Turkey. Service centres and distributors are
reluctant to purchase as they would like to get a clearer picture of the market.
Local end-user consumption is weak. No upturn in market activity is foreseen
until the end of the summer, at the earliest. The mills are targeting overseas
customers to offload their surplus output.
Difficult business conditions persist, in the United Arab Emirates. Market
confidence is still lukewarm. Sales to end-users and distributors are weak.
Producers considered implementing a domestic price advance, but, so far, this
has not proved possible. Traditionally, sales volumes decline in August and
September, as warmer temperatures curb construction activity. Export
opportunities are limited outside the GCC region.
The outlook is unchanged in the South African steel market. Steel distributors
are extremely reluctant to purchase material in the current business conditions.
Activity in the public sector is lacklustre, at present, as the market awaits
government decisions on new construction and infrastructure projects.
The prognosis for the Mexican steel market is unchanged. The business
environment is unpredictable. Buying sentiment is being shaped by expectations
of further significant price fluctuations. Service centres are reluctant to
conclude contracts, due to weak orders from construction and manufacturing
companies. Meanwhile, shipments of finished steel products to the United States
have resumed, this month.
Source: MEPS -
Steel Review - June 2019 Issue
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