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Home > MEPS Steel News - 21.11.2017

Escalating Mill Input Costs Propel Steel Prices Upwards

The Brazilian steel industry remains positive regarding the outlook for production and consumption, in the first quarter of 2018. Distributors, however, note that any price growth next month is likely to be moderate. Meanwhile, the Council for Economic Defense (CADE), the country’s regulatory authority, postponed its decision on the acquisition of Votorantim Siderurgia by ArcelorMittal Brasil. The final verdict will be revealed in March.

Russian steelmakers are faced with a dilemma of whether to ride out the difficult domestic trading conditions, or downgrade planned production targets. Domestic stockists are allowing inventories to run down, in order to free working capital and minimise potential losses, as current demand reduces. Traditionally, sales activity is dull, in the December and January months.

Indian steelmakers are divided about the prospects for local steel consumption and the short-term steel price trend. Distributors question whether the new domestic selling figures are supported by market and economic fundamentals. Third country flat product import offers are available but buyers show little interest.

Ukrainian trading houses plan to carry minimum stock during the winter trading months. End-users are still waiting for evidence of price stability. Exporters lifted selling figures, following a sharp rebound in the price of billet, slab and steelmaking raw materials.

The outlook for the Turkish steel market remains unsettled. Domestic steelmakers adopted “reactionary” pricing strategies in December. Effective prices increased on a weekly basis, driven by firm distributor demand and rising input costs – particularly, ferrous scrap. Long product suppliers continue to redirect surplus output to overseas customers - particularly those in Southeast Asia.

Steel merchants, operating in the United Arab Emirates, intend to persevere with cautious procurement strategies in early 2018. The majority assert that the introduction of a 5 percent value-added tax (VAT) will have a negligible impact on buying trends. Chinese steel import prices are unattractive.

In South Africa, distributors queried whether the latest increases in domestic price levels are supported by market and economic fundamentals. They note that demand from the key steel consuming industries deteriorated ahead of the upcoming shutdown period. The construction sector continues to be devoid of public and private finance.

Mexican stockists expect further spot price hikes. Domestic suppliers are likely to make an attempt to lift their transaction values, in either late December or early January. They are encouraged by the price developments in the US market and the rebound in the cost of steelmaking raw materials. Activity in key consuming industries of construction and manufacturing is dull at present.

Source: MEPS - Developing Markets Steel Review - December 2017 Edition

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