STEEL PRICES IN THE DEVELOPING MARKETS' REMAIN UNSETTLED IN FEBRUARY - MEPS

Trading activity in Turkey has been sluggish in February. A few local long product steelmakers have opted to downgrade their production. The decision was taken after poor orders for construction steels were received. In the flat product segment, Erdemir raised its basis list values in early February. Observers had expected the adjustments. The absence of Chinese suppliers and higher CIS offers made the new prices attractive. Expectations are rife that that there will be a minor flat product price increase in March.

The outlook for the UAE steel segment is still quite poor. The market lull has not deterred foreign suppliers from raising their quotations to the Gulf State. Import values are now shadowing international price movements. Active buyers remain in short supply and are booking only small lots. Domestic rebar producers have been forced to raise their ex-works prices due to more costly billet and ferrous scrap material. Moreover, the uncertainties that have prolonged the Dubai downturn are now spreading to other Emirates. Observers have downgraded their expectations for construction activity in Abu Dhabi and Sharjah.

Indian flat product steelmakers have warned that their domestic quotations may rise again in March or April. Pressure is being exerted by improved demand and higher raw material costs. Attention is being paid to the negotiation of coking coal and iron ore contracts. Long product values have continued to weaken in February. On a lighter note, the speculators that caused problems in the semis and ferrous scrap markets are no longer present. If there are no surprises in the forthcoming budget, demand for both flat and long products may continue to rise through to the fiscal fourth quarter.

Difficult trading conditions have persisted in South Africa. The price differential between Highveld and ArcelorMittal South Africa (AMSA) is negligible. Only discounts and payment terms separate the two steelmakers. Observers do not expect any price changes until April, and then, sentiment is indicating that there will only be a minor upward change in coil and plate values. The mills are aware that a substantial price increase will be unwelcome. A few disenchanted merchants have already started to import heavy plate and structural sections.

Brazilian steelmakers left their local steel quotations untouched in February. The price stability has been attributed to steady inventory levels and availability of cheaper imported material. Import volumes have risen since the internal mills raised their domestic prices in December. Nevertheless, domestic customers have been informed that prices may be raised in March. Attention will now focus on how generous the mill’s discounts will be and the pricing strategies of foreign suppliers.

The Mexican steel industry’s recovery may be slow and protracted. Local requirements for construction steels are steady. Altos Hornos de Mexico SA (AHMSA) is expected to try and raise its long product quotations in March. Adjustments to domestic flat product offers are less certain. Several manufacturers are procuring material on a requirement basis – this strategy will remain until their US clients resume ordering.

In the Russian market, long product mills are expected to increase both their domestic and export prices in March. The adjustment has been linked to their failure to synchronize their 3A ferrous scrap purchasing prices. Overseas markets have been soft. Exporters were forced to downgrade their finished products offers.

Market sentiment in the Ukraine improved in February. Shipments to the mechanical engineering and construction segments started to recover. The latter is being driven by stadium and infrastructure projects related to the 2012 European Championship football tournament. Exporters have reported that order volumes from their traditional customers in Europe, Turkey and Russia, show signs of recovery.

Source: MEPS - Developing Markets Steel Review - click here for a free sample copy

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