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STEEL MARKETS IN DEVELOPING NATIONS
UNDERMINED BY ECONOMIC UNCERTAINTY
Domestic average steel market prices were stable in
Brazil, increased in India and South Africa but declined in Russia, Ukraine,
Turkey, UAE and Mexico in November. However, due to a weakening of the US dollar
against most other currencies over the past few weeks, MEPS BRIC Countries'
average transaction prices increased in November for all eight carbon steel
product forms researched. The upward movement varied between 0.4 percent for hot
dipped galvanised coil and 4.3 percent for reinforcing bar.
The Brazilian steel industry remains positive on the general outlook for
production and consumption in 2012. However, distributors assert that lower
import offers have cancelled out the real’s upward currency movement against the
US dollar. The price premium demanded by domestic coil producers over imports is
being closely monitored.
Russian steelmakers are expected to downgrade output rates to stabilise
transaction values. Domestic steel consumption has entered a period of low
seasonal demand and overseas sales volumes have stagnated.
Downstream demand for finished steel in India weakened in the post-Diwali
period. Distributors have queried whether the new domestic price levels are
supported by market and economic fundamentals. West Bengal steelworks have
lobbied the state government for assistance, following the suspension of iron
ore deliveries from Joda mines in Odisha (formerly Orissa). The Supreme Court’s
July ruling on iron ore mining activities in Bellary (Karnataka) remains in
place.
The Chinese steel industry has begun to bring production into line with
consumption rates. The government has reiterated its commitment to enforce its
tight monetary policy. No credit loosening is expected in the near-term.
Distributors and downstream industries plan to avoid holding or building
inventory.
Ukrainian steel merchants are allowing stock levels to rundown, in order to free
working capital and minimise potential losses in a falling market. Ilyich and
Zaporizhstal are expected to adopt lower pricing positions next month, following
stagnant domestic and overseas demand.
Turkish steelmakers are under pressure to bring production targets into line
with steel consumption rates. Downstream demand for finished steel remained
subdued after the Kurban Bayrami holiday (Eid Al-Adha). End-users are still
waiting for evidence of price stability. Distributors were left with little
choice but to persevere with cautious procurement strategies.
The outlook for the United Arab Emirates’ steel market is unchanged. Falling
import quotations and the effects of uncertain global economic conditions have
undermined market sentiment. Construction activity exhibited no improvement in
the period after the festival of Eid Al-Adha. End-users are also still wary of
making purchases. The distribution chain has persevered with conservative
inventory levels as a result.
Difficult trading conditions persist in South Africa. Cape Gate and Scaw Metals
Group have continued to maintain aggressive pricing positions in AMSA’s absence.
End-users are purchasing material on a requirement basis. Restocking remains
negligible. Shipments to the country’s mining sector are expected to recover in
early 2012.
Mexican steelmakers lowered their price demands for several steel products,
following aggressive import offers from US suppliers and faltering domestic
demand. Distributors persevered with cautious procurement strategies as a
result.
Source: MEPS -
Developing Markets
Steel Review
Also see - BRIC
Steel Prices Online and
BRIC Steel
Price Index
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