CRU: Demand-side Factors to Create Drag on Global Sheet Markets

In Europe, market participants are concerned over near term end-use demand, and this has weighed on potential price support from restocking. At the same time, imports have continued to arrive and have reduced buyers’ need to source from domestic mills. We do not expect to see these factors change much over the coming month.

The Chinese market is waiting to see evidence of higher demand from recently announced stimulus measures. Supply-side restrictions have been enacted at some mills, but larger restrictions have still not been announced. Raw material costs have increased but with demand weak and supply cuts, limited margins will continue to be squeezed. Developments in China will be key to price direction in other areas of Asia. In ​Southeast Asia, and particularly in India, some seasonal restocking has allowed domestic prices to rise. There are also expectations in the market that exports to Europe and the Middle East will rise. As such, we see some price support heading into October for much of Asia, especially in the Indian domestic market.

Looking at South America, domestic demand in Brazil remains weak, although some market participants expect it to rise over the near term. Still, supply availability in the country is high and an uptick in demand is unlikely to cause a meaningful upswing in prices. At the same time, import availability remains high as Brazilian prices sit at a 22% premium over imported Chinese material.