Posted on 18 Jul 2022
ASEAN steel markets are very quiet as buyers and traders continue to watch with trepidation the rapid steel price erosion of recent weeks. Market players are bracing themselves for further price declines because there are no positive signs that could bolster market sentiment or demand, Kallanish notes.
Speculative traders have been blamed for driving regional prices down quickly because of short-selling. Regional mills are also facing very weak domestic and export demand in a market where liquidity is tight. “I don’t see any improvement in the near term,” a regional trader in Singapore says. “There are too many negative signals. Interest rates are set to rise further too.”
Some have expressed disbelief at the rapid downturn in the market. “Nobody really saw this coming,” a Manila trader says. While he is aware the market has been weak, he adds: “I didn’t think it would come down to these levels so soon and by this much. So, most market players, from raw material suppliers to mills, to traders, to stockists, to end users, have all been blindsided.”
There are also concerns that regional markets would need time to digest high-priced steel and raw materials that were booked previously and only arriving now after prices have come off so sharply. “Customers are not positive. They are unhappy because prices are dropping,” a trader in Jakarta says. Steel cargoes are arriving that were booked at $100-150/tonne higher than today’s market level, he notes.
In Vietnam, government controls on credit and lending in the property sector have hit domestic steel demand, while steel inventories have risen. Steel prices fell in Vietnam in February and March but bounced back up on account of the Russian invasion of Ukraine.
Prices have since slumped to lower than earlier this year. “I don't see any positive information to support prices at least for the rest of the year. The market is still waiting for some positive action from the Chinese government,” a Vietnamese mill manager says. Plans to cut back capacity are under discussion, a manager with another Vietnamese mill says.
Source:Kallanish
