Brazilian Steel Market Sentiment Mixed For February
Brazilian steel market sentiment has showed mixed views for February, with the scenario for flats and longs prices in opposite directions, according to the survey.
In the survey of Brazilian producers, distributors, traders and end-customers conducted from late January to the beginning of this month, the index for finished steel price development stood at 69.52 – down 5.48 points from January — influenced by 52% of respondents expecting hikes and 25% seeing price declines.
In general, readings above 50 are interpreted as bullish, and readings below 50 are interpreted as bearish. A reading of 50 means no change.
Producers and traders were notably bullish, with a price index reading of 80 points, while consumers expressed contrasting fortunes, depending on the product, with an index at 62.
“Market is firm and demand rising, plus production costs are high,” a producer respondent said.
A long steel consumer disagreed, saying the market is struggling with the lack of economy growth, in addition to high inflation rates.
“A large volume of imports has yet to clear customs,” another consumer said, signaling an additional pressure on domestic prices.
One trader commented that Chinese steel prices post-Lunar New year at higher levels could determine the direction of prices in Brazil for the coming months.
As reference, China’s domestic steel markets remained upbeat in the first working week following the Lunar New Year holidays (Feb. 1-7), driving up spot steel prices.
Brazil domestic hot-rolled coil prices remained static the week ended Feb. 11, although buyers saw the absorption of an announced price increase of 5%-8% more likely for the coming week, said sources.
Domestic rebar prices, meanwhile, may slide even further because of the quiet demand, according to sources. Importers who were already selling port-stocked goods at a loss have increased discounts given. Moreover, some distributors may also see larger discounts by local mills.
The index for inventory sentiment also dropped double digits to 60.9 from 74.1, mainly linked to expectations of reduced purchases by distributors through month’s end.
As for raw materials, 86% of respondents were expecting higher prices for February, with an index at 78.09, up 2.19 points from the previous month.
“Although scrap prices are lowering, others raw materials such as iron ore, pig iron, coal and energy are rising,” a producer said.
As for finished steel production, the index stood at 64.76, down 12.04 points from January.
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