DOUBLE DIGIT STEEL PRICE HIKES IN MOST DEVELOPING COUNTRIES IN APRIL

Turkish long product steelmakers raised their domestic quotes twice in April. The majority struggled to sell their products. Buyers have had difficulty adapting to the price volatility. Most preferred to adopt a cautious procurement strategy. In the short term, utilisation rates will remain unchanged. Seasonal demand is only having a marginal impact on consumption levels. Sale volumes of flat products are low. Many end-users have found Erdemir’s April price adjustment unacceptable. Nevertheless, the mill is widely expected to lift its prices by at least $US50 in May.

Steel consumers in the United Arab Emirates have found themselves once again at the mercy of the global market. Effective steel prices have firmed in spite of the region’s low requirements. Evidence suggests that local distributors and end-users have learnt from the events of 2008. Recent buying activity has been largely speculator-led. Genuine steel consumers remain in short supply. Domestic rebar producers and re-rollers have raised their ex-works prices to reflect higher input costs.

Integrated Indian steel producers have raised their April domestic quotations for flat and long products by more than Rs2,000/3,000 per tonne. Discounting and rebates have limited the size of the "real" price increase. The latest adjustment was primarily driven by higher raw material costs such as coking coal, imported ferrous scrap and iron ore. The move from annual to quarterly contracts has not been helpful. The domestic market had already entered a cycle of high cost pressures. Re-rollers have struggled to manage their production costs – this has been reflected in their long product offers. The recent upward movement in finished steel prices has not overly alarmed the Indian government. There are no inflationary concerns at present.

The ill feeling between producers and domestic steel consumers in South Africa remains. ArcelorMittal South Africa (AMSA) has informed its customers that from next month it will be introducing a 'Sishen surcharge’. This has been initially set at R600 per tonne and will be reviewed on a monthly basis. The mill will have to pay Sishen Iron Ore Company (SIOC) commercial terms for future iron ore supplies. The announcement has been criticised by both government officials and end-users. Last month, the miner informed the steelmaker it was ending the long-term agreement to supply iron ore at cost-plus 3 percent.

Brazilian steelmakers have adopted different price strategies for April. Usiminas has raised its local steel quotations by 11 to 15 percent. The mill blamed higher raw material costs for the last adjustment. ArcelorMittal Brazil has opted to leave its domestic finished steel quotations unchanged. Local steel consumers have reacted cautiously to some of the latest offerings. A few market participants have found the new levels unacceptable and have turned to sourcing imported material.

The Mexican steel industry has lobbied the Calderon government to re-evaluate its plan to remove the existing tariffs on imported steel. Local steelmakers are looking for these measures to be retained for the foreseeable future. They are deemed necessary to protect incumbent market shares from aggressive foreign sellers. Unsurprisingly, end-users do not share this opinion. Imports free of duties, in their eyes, would introduce some much needed price competition into the market.

In the Russian Federation, the Federal Antimonopoly Service (FAS) has begun examining the domestic pricing strategies of Evraz, Mechel, Magnitogorsk Iron and Steel Works (MMK) and Severstal. Uralvagonzavod had complained to the federal body about the steep rise in the ex-works quotations it had received. The industry has stressed that local offers are still below the pre-financial crisis levels.

Ukraine is locked in a period of low demand and weak buyer sentiment. Procurement activity is mostly trader led. The industry has blamed the recent price surge on the cost of raw material. Shortages of certain products have not been helpful. In previous years, the industry could rely on orders from on-going work related to major state-funded infrastructure projects. Presently this is not possible, as the government’s budget has not been approved.

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

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