STEEL PRICES UNDER NEGATIVE PRESSURE IN MOST DEVELOPING NATIONS

Negotiated prices remained unchanged in Turkey until mid-October. Local steel producers refused to revise their domestic quotations. Since then, finished products values have declined on average by $US20/40 per tonne. Export offers have softened by a similar amount. Merchants are confident that steel prices will fall again, and a few are already predicting that this volatility will continue into 2010.

Market sentiment in the UAE is now mirroring global trade. Import values have fallen towards more rational levels. Last month’s values were unsustainable. Price weakness has discouraged traders and steel merchants from procuring material. Observers had forecast positive trading activity. So far, this has not transpired. Locally produced rebar is now shadowing Turkish input material values.

Indian flat product steelmakers remain positive. Domestic list prices for flat rolled material have been stable this month. However, the mills have cut their discounts by Rs400/1,000. Sales volumes have been supported by gains in the Festival season. Selling prices for shipments to the consumer durable manufacturers have hardened. Long product buyers are still hesitant to restock. The effective prices of construction steel have been slow to align themselves with scrap and semi-finished product values.

Market sentiment is mixed in South Africa. Producers are presently operating near 75 percent capacity. It is still uncertain when full output will be achieved. The domestic economy remains troubled by anaemic economic fundamentals. The manufacturing industry has been more positive of late but this optimism is still yet to be backed up by solid orders. Traditional export markets in the Southern Africa region are also reeling from the global downturn.

Brazilian steelmakers have left their basis prices unchanged in October. Gerdau and ArcelorMittal have attempted to placate their irate long product customers with this policy. These mills have stated that their local quotations would remain stable until at least 2010. However, traders believe that the two steelmakers will amend their discounting system soon. Flat product mills employed a similar course of action in September. Last month the government warned it would review the country’s import duties if prices continued to rise. This issue has not been raised again.

Grey clouds have continued to encircle the Mexican market. Local buyers are still only purchasing small lots of material. The low sales volumes have brought about further price concessions from the mills. Speculation is rife that basis prices will be moderated in November.

Plant utilisation rates at the Russian steelmakers have continued to climb in October. The Chelyabinsk Metallurgical Plant has announced the biggest production adjustment. Russian semi-finished and flat product values have risen again. The latest amendment was not driven by underlying demand but by the emergence of a coking coal deficit and the subsequent rise in local coke quotations.

The Ukrainian steel industry has also overcome raw material shortages. Last month’s production levels were constrained by these deficits. Local producers are now planning to increase their output levels in October. ArcelorMittal Kriviy Rih (AMKR) suffered the most from the coke shortfall. Flat product values have stabilised, whereas long product figures have edged higher. The latter has been induced by rumours of an imminent price adjustment. This correction is due to higher metallurgical coal and coking coal prices. Purchasing activity in Dnepropetrovsk and Kharkov remains depressed but trading conditions are more favourable in Kiev.

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

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