Economic Uncertainty Weighs Down the Emerging Steel Markets

 The  prognosis for the Brazilian steel market is unchanged. Steel demand is  tepid. Several small price advances were noted, compared with  September’s numbers. Buyers feel that current transaction values are  unjustified, although the steelmakers are claiming higher figures for  next year. The current inflated mill prices are proving problematic for  independent distributors who are having difficulties in passing on the  increases to their customers.

Russian steel producers are divided over the prospects for domestic  steel consumption in the remainder of the final trimester. Service  centres are eager to reduce their stocks, concerned that sales activity  will be lacklustre, in this period. Construction-related steel demand is  slowing down. This trend is expected to continue, as unfavourable  weather conditions take hold across the country. Exporters cut prices  further, to gain overseas business.

In India, orders, for the local mills, are not expected to improve,  significantly, in the near term. Service centres are reluctant to commit  to forward orders, anticipating reduced domestic mill prices, during  the Festival trading cycle (October to November). Construction activity  is limited. Meanwhile, ArcelorMittal is reported to be the preferred  buyer of Essar Steel, subject to restrictions and approval by the  National Company Law Tribunal.

Chinese stockists are cautious about the strength of underlying  consumption in the November-December period. Several firms are only  booking material for short-term needs, citing concerns over further  price volatility, and the impact of impending government production cuts  and rules on pollution. Support from external demand is limited,  hindered by antidumping measures in overseas markets.

Business confidence is tepid, in Ukraine. Distributors are buying only  what they need to cover immediate orders. They are wary of carrying too  much inventory into the country’s winter trading cycle. Price support  from foreign demand is limited. The local association of metal  producers, Metallurgprom, reported that finished steel production, in  September 2018, totalled 1.57 million tonnes – up 3.0 percent,  month-on-month. 

Arduous trading conditions persist, in the Turkish steel market.  End-user demand for finished steel products is subdued, while purchasing  activity by stockholders is weak. MEPS is forecasting additional price  concessions from domestic suppliers next month.

The Emirati steel industry is struggling to adapt to the unpredictable  business environment. Distributors plan to persevere with conservative  purchasing strategies, in November, citing the ongoing uncertainty  surrounding future industrial activity and a lack of investment in  construction. 

Downstream demand for finished steel, in South Africa, fell short of  market projections. Stockists and traders report that profit margins are  being squeezed. With prices continuing to move up, they are only buying  for current demand. Traditionally, key consuming industries shut down  for a four-week period in mid-December.

Procurement activity in Mexico was less vigorous, this month, than in  September. Service centres believe that further price cuts are  inevitable, citing a slowdown in construction activity. MEPS notes  minimal speculative purchasing. In general, inventories are in balance.  Meanwhile, the National Chamber of Iron and Steel Industry (CANACERO) is  adamant that it is imperative, for the new government, to obtain  exemptions from both U.S. steel import tariffs and Canadian import  safeguards.