Johannesburg - The South African steel industry
is still troubled by weak economic fundamentals, steel analysts MEPS
reported on Monday.
Releasing a report on how steel prices in developing markets continued
to increase in September, MEPS said underlying demand in South Africa was
still driven primarily by state-funded capital projects.
"Private buyers are still largely absent despite the government's
stimulus measures," said MEPS, adding that in spite of global economic woes,
nearly all distributors have raised their basis prices.
Further adjustments are expected next month with ArcelorMittal South
Africa having announced its flat steel basis prices would rise by as
much as 4% in October.
In contrast, long product basis values are unchanged.
Turning to other developing markets, MEPS said the UAE market was also
relatively quiet with sentiment mixed among local steel merchants.
"The more positive are forecasting improved trading activity at the end
of Ramadan," said the report.
The emergence of material from Mainland China has checked the spike in
import values and local UAE rebar producers have raised their domestic
offers in response to higher billet and scrap values.
But sentiment among Indian flat product steelmakers remains upbeat.
Domestic offers for flat rolled material have risen once more and
further increases are likely to follow, as the country enters its pre-
festive season.
Traditionally strong
"This is a period when demand for consumer durables is traditionally
strong. There are also positive vibes being felt in the long products
segment," said MEPS.
The effective prices of construction steel have stabilised after
previously negotiated deals were on a downward trajectory.
Orders from the building sector are now expected to harden.
In Brazil the steel industry has continued to benefit from the
government's stimulus strategy.
The measures have primarily focused on large-scale public infrastructure
projects, reduced duty on new cars and a series of tax breaks.
Healthier economic fundamentals have made internal producers bullish.
This month, Usiminas, CSN and ArcelorMittal raised their domestic flat
steel products prices by an average of 13% while long product values were
stable.
In Russia steel plant utilisation rates are on average approaching 75%
with most of the major mills persisting with their August activity levels
this month.
Severstal has announced plans for a substantial increase in output,
aiming to raise supply by 13% to 850 000 metric tonnes.
MEPS said the Ukrainian steel industry was also showing signs of
recovery.
Finished production in August increased by 6.3% to 2 415 000 tonnes
compared to July but shortages in the local market and low inventories were
starting to propel domestic prices higher.
The report noted that the Mexican market was, however, exhibiting no
positive signs of recovery.
"Sentiment is subdued among end-users and this is echoed in low sales
volumes. Manufacturers are still waiting for US consumer spending to
rebound. Local steel producers have left the majority of their basis prices
unchanged," said the report.
- I-Net Bridge