Apr 14 2022
Most of market participants expect Brazilian finished steel prices to inch up further in April due to higher costs, increasing export allocations from mills, data from the monthly steel sentiment survey by S&P Global Commodity Insights showed.
In the survey of Brazilian producers, distributors, traders and end-customers conducted from late March to the beginning of this month, the index for finished steel price development stood strong at 80 points -- flat from March -- influenced by 76% of respondents expecting additional hikes.
In general, readings above 50 are interpreted as bullish, and readings below 50 are interpreted as bearish. A reading of 50 means no change.
While producers have cited increasing costs as the reason for the 15% price hikes announced for flats and longs finished steel products, consumers said that in addition to that, mills have also increased their attention and volumes to the export market.
The Platts Brazilian domestic HRC price was assessed April 14 at Real 6,275/mt, or $1,335.11/mt, ex-works, excluding taxes, based on a range of Real 6,150-6,400/mt.
The Platts Brazil domestic 10 mm rebar price was assessed at Real 4,900/mt, or $1,042.55/mt, ex-works, taxes excluded, based on a range of Real 4,800/mt-Real 5,000/mt.
Moreover, sources said mills are already discussing the possibility of a second price increase for mid-April or early May.
"Mills are keeping an eye on China to prevent a flood of imported products," one market participant said.
As of raw materials, about 70% of respondents also see scrap and coal prices rising further in April, with a general index of 80 points -- down 2.72 points from March. Producers were notably confident on such increasing costs with an index reading of 90.
Brazilian ferrous scrap grades have risen 10%-20% since the start of April, while imported coking coal/coke has been limited and subject to Australian and Chinese market fluctuations, S&P Global data showed.
"Freight continues to weigh on dealers' operations, and the decrease in supply of automotive scrap contributes to the scenario of lifting prices amid firm procurement," one participant said.
As for finished steel production, the index slipped 0.65 to 65.71 -- with 45% of respondents forecasting slightly higher output rates in April.
Respondents expected finished steel inventory levels to remain stable in the market chain, with an index reading of 51.81 points, compared with 64.76 in March.
"Consumers tried to anticipate purchases in March, aware of the hikes to come in April and possibly in May," one participant said.
One buyer confirmed that he replenished his inventories in February-March and thus was not planning any purchases this month.