SLIGHT POSITIVE SIGNS FOR STEEL PRICES IN DEVELOPING COUNTRIES

The Turkish long product producers have once again tried to raise their local offers. The higher prices were driven by the spike in the cost of semi-finished products - not actual demand. However, very little structural steel was sold and by mid-May sections and beams prices started to backtrack towards April levels. Market conditions within the flat products segment stabilised this month. Enquiries have increased but were speculative in nature. Procurement managers are still not responding to the low prices. Selling figures for cold rolled products may rise next month owing to a shortage of material.

UAE traders have been generally more positive this month. Nevertheless, it is far too soon to pass judgement over whether or not buyers will restart importing material. Underlying demand continues to be restrained.

This time last year Dubai was a hub of activity but a lot has changed in 12 months. The Emirate’s construction bubble has burst. Quayside stocks have fallen to manageable levels but still have not been exhausted due to the challenging trading conditions. The recently imposed import duty has increased the popularity of locally produced long products.

There is still not much evidence that underlying demand is improving in India. Producers are reporting a seasonal reduction in consumption. Sales volumes of long products are set to fall next month due to the onset of the monsoon season. In spite of this, market participants are forecasting a strong finish to 2009 - supported by new capital investment in the country’s infrastructure. The outlook for the flat products segment is less certain. Transaction values remained stable despite attempts by the mills to lift the market price. The major steelmakers have been lobbying the government to control the inflow of cheap imported steel products.

Purchasing activity in the CIS market is still soft. Only a few mills have lowered their offers this month. The majority held their ground and left their prices unchanged. Previous revisions failed to entice industrial enterprises back to the market. The export orientated Russian and Ukraine mills are now struggling to sell finished steel products to their overseas customers. The authorities in India, Turkey and the UAE are now imposing import duties on what they deem to be cheap material.

Market participants in the South African steel industry have seen no “green shoots” of recovery. Domestic steel consumption is still muted, which has placed downward pressure on transaction values. The outlook for long products remains more favourable than that for their flat product counterparts. State-funded infrastructure projects are still consuming significant quantities of structural steel. However, orders from the manufacturing sector, particularly the automotive industry, continue to be sluggish.

The outlook for the Brazilian steel markets remains opaque. Sentiment amongst buyers and sellers has improved this month compared to April. Furthermore, prices have shown a degree of stability. However, there is still no visible evidence that real demand will pick up in the interim period. Local steelmakers are still operating facilities with only one or two shifts.

The Mexican steel industry has faltered. Shipments to the manufacturing and construction sectors remained low. The swine flu outbreak only exacerbated an unfavourable trading environment. A small number of merchants are hopeful that orders will pick up in June.

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

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