UK based MEPS said that in the Russian Federation, difficult steel trading conditions are expected to take hold in December. End users and distributors are unsure what pricing strategies will be adopted by the mills. Traditionally, finished steel selling figures are lowered to facilitate sales. MEPS said that “With the end of the construction season approaching, Russian mills are now looking ahead to 2011. Steel demand from the country’s construction industry is forecast to rise by as much as 12%. However, this figure may prove to be optimistic.”
MEPS said that “Ukrainian producers are increasingly finding it difficult to sell material. Domestic ex works finished steel product prices have begun to stagnate. Large orders for rolled sheet/coil from the mechanical engineering sector are now limited. Sales volumes of flat products have fallen by nearly five percent. With the country’s building season drawing to a close, business activity in the long product segments is expected to peter out in November.”
It added that “Different pricing strategies have been adopted by Turkish steelmakers. Flat product mills have opted to reduce their selling figures to promote sales. Expectations are leaning towards stable demand and prices, at best, in December. The options available to their long product compatriots were limited by the lacklustre distributor trade and rising production costs. Steelmakers lifted their ex-works prices in the run up to Eid al-Adha. A strong semis segment allowed integrated steelworks to offset part of the additional cost of imported scrap. Several rolling mills were able to avoid the higher input prices by undertaking maintenance work or halting production.”
Since the end of the Diwali festival, Indian steelmakers have signaled that selling figures will be increased in December. Basis prices were reduced in November. The largest decreases transpired in the flat product segments. The cuts were introduced to facilitate sales and avoid overstocking. Local producers are now looking ahead to 2011. As in other years, there are indications that the steel industry will benefit from infrastructure investment. However, it is far from certain that all of the state-funded projects will be carried out.
MEPS said that “Purchasing activity in the United Arab Emirates was dull prior to Eid al Adha. The distributor chain has again exhibited limited interest in taking delivery of new steel. Several local traders have issued higher selling figures based on the expectation that buying activity will pick up in late November. Others are forecasting demand to remain at current levels, at best, next month.”
Sentiment in South Africa has remained subdued in November. Ex works offers are now likely to remain unchanged until the end of the year. Distributors have struggled to sell their supplies and are sitting on a significant volume of stock. Material is now starting to be sold on pre-payment terms to avoid bad debts. These firms still do not believe that there is an opportunity to import steel. However, the strength of the Rand has made this an option.
The Brazilian government has introduced a controversial set of new minimum import prices. A total of 16 flat and long steel products, such as hot rolled, cold rolled, wire rod and reinforcing bar are covered by this initiative. Local producers have asserted that the measures are a stepping stone to prohibit under-cutting practices by foreign suppliers. Domestic distributors and traders are not convinced. There is confusion over how the “minimum custom price” will be calculated. The new regulations are likely to result in longer delivery lead times for imported steel products.
MEPS added that “Weak economic fundamentals have continued to pose problems for the Mexican steel industry. Distributor trade has deteriorated as a result of worse than expected demand from construction and infrastructure projects. This has forced domestic producers to respond with lower prices. Expectations are for further price reductions in December.”