The Covid-19 Pandemic Halts Steel Trading in Several Emerging Markets
Steel trading is temporarily suspended in India and South Africa, due to government measures to contain the spread of coronavirus.
Business confidence is deteriorating, in India, as a result of the country’s strict Covid-19 measures. All steel trading activity is suspended. Service centres expect that end-user demand will remain muted, in the coming months. Exporters are focused on developing new business opportunities in the Middle East and Asia.
Steel trading is suspended, in South Africa. Traders and service centres are questioning the sustainability of the current flat product transaction values, specifying that price support is limited. Offers from third country sources are becoming more competitive.
Economic fundamentals deteriorate in Latin America
The trading climate is fragile, in Brazil. Business sentiment is soft. Economic fundamentals are deteriorating. Domestic steelmakers reined in their pricing ambitions, for April business. Underlying consumption has fallen short of industry projections.
Mexican steel distributors are wary of committing to forward orders, as a result of the unpredictable trading climate. Bid prices are much lower than the official April offers. MEPS’ research indicates that fears of a recession are growing amongst downstream users. Meanwhile, the National Chamber of Iron and Steel Industry (CANACERO) is lobbying the government for additional measures to protect the domestic manufacturing and steel industries from foreign competition.
CIS distributors braced for weakening end-user activity
Sentiment for steel purchasing is subdued, in the Russian Federation. Domestic steel producers adopted a more conciliatory pricing strategy, in April. The concerted effort to bring domestic prices closer to export parity was stopped, mid-month. Russian stockists expect that the government’s strict Covid-19 measures will be imposed in the country’s other federal districts. Construction activity is suspended in Moscow and its surrounding municipalities. Overseas steel demand is sporadic, deflated by the global coronavirus pandemic.
The outlook for the Ukrainian steel sector is gloomy. The distribution network is forecasting that the business climate will deteriorate, in May. Many of these firms are preparing themselves for a significant downturn in end-user consumption.
Further slowdown anticipated as Ramadan commences
The trading environment is difficult, in Turkey. Local stockists are purchasing material only on a requirement basis, in anticipation of further price concessions from domestic suppliers. Several producers, operating electric arc furnaces, halted production, citing low finished steel consumption and volatile scrap costs. The mills’ selling prices are being reviewed, on a daily basis, to offset the weakness of the Turkish lira against the US dollar. Export markets are still weak.
Business is subdued in the United Arab Emirates. Stockists are concerned about carrying too much inventory over the next two months. Construction-related activity is suspended. The situation is being exacerbated by the Covid-19 pandemic and the festive month of Ramadan, which commenced on April 23. Export opportunities are limited outside the GCC region.