EFFECTIVE STEEL PRICES REMAIN UNDER PRESSURE IN THE DEVELOPING MARKETS

In the Russian Federation, the Federal Antimonopoly Service (FAS) has continued to investigate the pricing strategies of Evraz, Severstal, NLMK and MMK. The probe was started after complaints were received from Uralvagonzavod, automobile manufacturers and tube mills. In spite of this, domestic quotations have remained high, whilst export prices have followed international trends and have fallen back. Traders are now looking to manage their stock reserves. Several firms have reduced their asking prices to facilitate sales.

Ukraine’s steel industry is struggling to come to terms with the difficult trading conditions in it’s domestic and export markets. Several steelworks claim to be open to negotiation and are inviting customers for private consultations. The downturn in export quotes has not gone unnoticed. This has placed pressure on domestic ex-works quotations. Consequently, producers have exerted pressure on non-affiliated distributors to maintain their ex-stock selling figures.

Difficult trading conditions have forced Turkish long product producers to downgrade their price demands. Several steelmakers are planning to reduce their capacities and bring forward scheduled annual maintenance work. Consumption rates are not expected to perk up until the end of the summer period. Sales volumes of flat products have remained soft. Erdemir’s decision to stop publishing it’s ex-works basis price list has added to the mayhem and has fuelled mistrust within the market. The mill’s quotations were previously used as a reference by competitors, traders and buyers.

The onset of the monsoon season has forced Indian steel producers to ease their prices demands. Re-rollers are now employing very aggressive pricing positions. The declines in semis and ferrous scrap figures have made this possible. Buyers are now forecasting further price weakness across the country as the monsoon rains take hold. This will exert pressure on sellers to offer more generous discounting and rebate terms.

Market sentiment is deteriorating in the United Arab Emirates. Both domestic and import quotes for long products have lost ground in June. With construction activity slowing down, local traders have started to exit the market. They are not expected to resume ordering construction steel until late August / early September. During the summer months, the domestic re-rollers have traditionally suspended sales or operated at reduced utilisation rates.

South Africa’s main steelmakers have been slow to reveal their July pricing intentions. ArcelorMittal South Africa (AMSA) and Highveld are expected to lower their quotations. The extent of the reduction is, so far, unknown. Observers suspect the new price lists will be delayed as late as possible. In the meanwhile, distributors and service centres are trying to liquidate their flat product and construction steel stocks. This has proved difficult in a dull trading environment.

Brazilian steel quotations have remained stable for a second successive month. Internal producers had threatened to raise their domestic prices by 10 to 12 percent in mid-June. This would have been only the second adjustment this year. In the end, the increase did not materialise. The Brazilian government had threatened to either remove or cut steel import duties. The availability of foreign supplies is a problem for the domestic industry. End users continue to use this material to hedge against any potential rise in the price of local products.

The Mexican steel industry was too bullish in May. Demand for long products from the construction and infrastructure sectors was weaker than expected. Rising inventory levels have forced local steelmakers and distributors to ease their prices. There is also growing evidence that real demand is still fragile and that restocking has been a catalyst behind the market’s recent strong performance.
 

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

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