STEEL PRICES IN DEVELOPING MARKETS JUMP 5 PERCENT IN MARCH

Turkish steelmakers have raised their domestic quotations several times in March, particularly the long product mills. Utilisation rates will, more than likely, remain at current levels. That is until either demand for construction steels improves or production costs stabilise. Exporters have witnessed buyer apathy in their traditional overseas markets. Domestic orders for flat products have also been muted. Expectation is rife that Erdemir will soon raise its basis values. This month’s higher hot rolled price was attributed to the absence of competitive import offers, whilst the new cold rolled quotations were blamed on material shortages. However, the decline in the hot dipped galvanised basis value was unexpected.

Difficult trading conditions have persisted in the UAE. The market’s low requirements have been overlooked as steel prices continue to rise. Local distributors and end-users have reacted cautiously to the March import offers. Deals remain in short supply and bookings tend to be only for small lots of material. There is a school of thought that the current price levels are unsustainable and a correction may occur in May/June. Domestic rebar producers have raised their ex-works prices to reflect higher production costs.

India’s steel markets have been destabilised by uncertainty in March. Producers raised their domestic quotations to account for the two percent rise in excise duty. The market is already expecting a further upward adjustment of Rs1,000/1,500 per tonne in April. Steelmakers have primed their customers to expect this. Most mills continue to cite increased demand and escalating raw material costs. Annual coking coal and iron ore contracts are presently being negotiated. Long product producers have also struggled with the price volatility in the semis and ferrous scrap markets.

Market sentiment is showing signs of improvement in South Africa. Highveld and ArcelorMittal South Africa (AMSA) expect local construction to expand in the second quarter of 2010. Requirements will be stimulated by public sector infrastructure investment. The outlook for private capital investment is less certain. The market widely expects AMSA to lift their April offers to cover additional production costs. This follows Kumba’s decision to cease supplying the steelmaker iron ore at cost plus 3 percent from its Sishen mine.

Brazilian steelmakers have once again backed away from raising their local steel quotations. Concerns remain that the volatile raw material costs will translate into higher finished steel values sooner or later. Steady inventory levels and the landing of cheaper imported steel continues to dampen price demands. Material of Turkish and Chinese origin has landed in the country. Some mills have offered discounts to their customers to counter the threat posed by foreign suppliers.

The Mexican steel industry is looking to the Calderon government to kick start domestic demand. Construction steel may receive a temporary boost from infrastructure expenditure. Local flat product requirements have also begun to improve but this has been from a low starting point. Any recovery is likely to be slow and protracted. End-users only partially accepted March’s price rises with material procured for short term needs.

Russian steelmakers are preparing themselves for local requirements to recover in April and May. Traditionally, this is a period of strong construction demand. Expectation is rife that the long product mills will pursue higher domestic and export prices next month. Producers were forced again to increase their scrap purchasing prices owing to domestic shortages. More material should be available in the forthcoming weeks as weather conditions improve.

The Ukrainian market continues to experience difficult trading conditions. Higher local prices have not improved buyer sentiment. The requirements of end-users are yet to recover to pre-financial crisis levels. Consequently, local steelmakers have continued to export material and operate at reduced utilisation rates.

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

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