meps: Seasonal demand and uncertainty fuels negative price sentiment in the BRIC countries
Jul 1, 2011
BRIC Countries' average transaction prices declined in June for six of the seven product forms researched. The reductions varied between $US2 per tonne for hot rolled coil and $US13 per tonne for cold rolled coil.
Brazilian steelmakers have persisted with moderate domestic pricing policies this month, despite the strength of the country’s currency and rising raw material costs. The steel industry does not want a reoccurrence of the surge in foreign supply that transpired last year. Distributor inventories have risen to more than 3.8 months of consumption. Higher interest rates have provoked a slowdown in procurement activity.
In Russia, demand for steel from the construction and industrial sectors have continued to grow. Positive developments persisted in the flat and long product segments, particularly reinforcing bar and hot rolled products. Realising that effective prices have bottomed out, trading houses have begun to replenish their depleted inventories.
Indian trading companies acted with extreme caution in June, fearing price volatility prior to the monsoons. Buying volumes are not expected to rebound in the period to September.
The Chinese market is forecast to experience difficult trading conditions in the second half of 2011. Private expenditure will remain soft, following the central government’s decision to tackle the country’s inflationary pressures with tight monetary policies. There are concerns that power shortages could simultaneously depress steel output and disrupt downstream demand.
MEPS (international) ltd. is an
independent supplier of steel market information.
For more information please visit MEPS website.
MEPS (international) ltd. is an
independent supplier of steel market information.
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