Brazil (EWZ) is expected to see a reversal of the downward trend in its economic growth in 2017, mostly with the help of rising commodity prices and improvements in exports.
If any proof were required that equities run on emotion, Brazilian markets have provided it. This isn’t to say there aren’t quality companies in the market.
The Brazilian real gained against the US dollar on September 3, 2015, after the Central Bank of Brazil announced the previous day that it will keep interest rates on hold.
Spot steel prices have inched up a bit after hitting their low in May. If the US steel demand stays strong and imports decline further, as they did in May, spot steel prices could see further upward movement.
Housing starts are a leading indicator of residential construction activity. Housing starts in May increased 4.6% on a year-over-year basis. However, compared to April, they dipped 11.1%.
Steel scrap prices tanked by more than 25% in February. This helped mini mills. They were at a competitive disadvantage due to the decline in iron ore and coal prices.
Clearly, Chinese real estate demand indicators are weakening. This is a negative sign for steel companies like Mechel (MTL) and Companhia Siderurgica Nacional (SID).
Steel production up until April 4 is down 6.3% over the corresponding period last year. The decline in steel production is negative for steel companies in the US.
A massive increase in steel imports has been the single biggest risk for the US steel industry. U.S. Steel faces challenges in its tubular segment also.
A low capacity utilization rate increases competition between existing industry players. This pressures steel prices as producers try to increase sales.
