London, 26 August 2011

Russian transaction values in the flat products segment remained steady this month. Price competition from CIS suppliers was minimal. Distributors report that shipments to the construction sector have peaked. Deliveries of reinforcing bar were disrupted by planned maintenance work and a shortage of freight rolling stock.

The general outlook for the Ukrainian steel industry remains positive. Local producers continued to operate at high utilisation rates in August. Shipments to domestic industrial firms were firm. Several trading houses believe that construction demand will soon decrease.

Purchasing activity has declined in the Turkish steel market. Long product steelmakers issued lower selling figures in week 32, following poor demand for construction steel. Mixed price sentiment has developed in the flat products segment. Distributors have expressed concerns over sharp currency movements and the European Union’s debt crisis. Most are now looking to September when booking activity should return to normal levels.

Sentiment within the Indian steel industry has been undermined by the Supreme Court’s decision to halt iron ore mining activities in Karnataka’s Bellary region. Shortages have spread to Maharashtra, Gujarat, Andhra Pradesh and Tamil Nadu. Planned production targets have been downgraded to conserve inventory. NMDC has been given permission to operate the company’s two Bellary mines to alleviate pressures.

The business climate in the United Arab Emirates remains arduous. Local trading houses carried leaner inventories into the Ramadan Festival. Industrial activity and construction work is not expected to normalise until mid-September.

Market sentiment has softened in South Africa. Customers have expressed concern over the latest problem at ArcelorMittal South Africa’s Newcastle steelworks. The producer has declared “force majeure” on shipments from this facility, creating a potential loss of around 400,000 metric tons of steel output. Imports are expected to make up any shortfall in domestic production.

In Brazil, buying volumes were lower than market projections in August. For some product forms, distributor inventories have remained in excess of four month’s consumption.

The Mexican steel industry is worried that the USA’s economic problems will spread across the border. Distributor trade is forecast to be unchanged in the third quarter. Underlying demand is expected to be driven by shipments to the automotive and construction sectors.

Ends --

Source: MEPS - Developing Markets Steel Review