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
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 -
Steel Review - December 2017 Edition
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