At the SteelOrbis Fall '11 Conference & 65th IREPAS Meeting held in St. Petersburg on September 25-27,we had the opportunity to discuss about the situation in the steel markets and about emerging markets with Kevin Geybels, West Africa Sales Manager at Belgium-based trading company Manuchar Stel NV.
Can you please enlighten us briefly about Manuchar and also your personal position in the company?
We are acting as a trader and distributor worldwide, trading mainly rebar and wire rod. And I'm the Sales Manager for West African market.
Last year it was said that demand is lively in western Africa. How is the situation this year? Does demand increase?
There is a certain demand, but we cannot say that it is increasing. What is different about western Africa as compared to other markets is that demand is stable in this market, even in crisis periods. The volume of trade to these markets is not high as it is in the Middle East or North Africa. And I do not think that demand will be that high in the medium term. However markets of west, east and south Africa is stable in terms of demand. Even if there is a problem in a country, other countries import material and sell in to the country who is facing difficulties. And this support demand to remain stable. But if you look at the Middle East for example. If there is a problem in a particular country, all the Middle East can halt all of a sudden. But the situation in the sub-Saharan markets is quite different.
Thus, can we say economic difficulties surrounding Europe are not affecting African markets?
No, they are not. It's not important for these markets where they buy from, as long as they buy as cheap as possible. The crisis in Europe may only provide advantage to these markets. A Europe heading for export markets will increase number of sourcing alternatives for these markets.
Where do you supply material for African markets?
From the Black Sea, Turkey, China and from Brazil, when they are in the market.
Can you find long steel from China?
Yes, we can. But in the past, we used to buy high tonnages from China. But Chinese prices are not competitive nowadays. Black Sea an Turkey are markets that we supply from the most.
What is the influence of the weak euro on your business?
Currently everybody is trying to buy material from Europe. Although prices do not drop on the euro basis, prices in the US dollar basis did. If we were supplying 90 percent of our rebar and wire rod demand from Black Sea and Turkey and the rest from Europe, now the ratio is changed to something like 60 to 40.
In which markets Manuchar is active?
Our largest market is Africa. But we also trade in Latin America, including central America. We are strong in some Middle Eastern markets, and we are not in some others.
In Latin America, particularly in Brazil, demand is said to have increased due to approach of certain big events. Does Brazil imports more steel?
Yes. Some suppliers in Brazil have supply contract with producers in Turkey, although they are suppliers themselves. But I do not think that this situation will last for a long time. Inflation in Brazil is too high. Besides, very high amount of fund have been given to investors as credit, and this bubble will burst finally. Prices will return to normal after the Olympics and World Cup and Brazil will become an exporter. There is a very similar situation for Argentina. They will also start exporting. But for now, domestic demand is still high.
Which markets step forward recently in your opinion?
Nigeria, Angola, Ghana, Botswana, Namibia. These are new markets added to the picture recently. And Ethiopia, where we were not active in the past.
In previous IREPAS meetings, traders stated that credit insurance costs are high for sub-Saharan markets. Has it changed?
No it hasn't. Risk is high in these markets, since the political uncertainty reigns. Thus, you should pay to cover those risks. And this pushes up prices to some extent, while squeezing margins in the same time. In the meantime, with the suspension of the North African market, competition in areas, such as west Africa has increased, contributing to further decrease in margins. But I think when the situation in Algeria, Tunisia and Egypt returns to normal, margins will be as they were before.
Do you think demand in North Africa will increase even when compared to previous levels?
Yes, certainly. It has already begun. You can ask it anyone in the IREPAS meeting.
Has the storm of China calmed down in export markets?
No. The volatility continues as it was before. Nobody can predict China's next move. And they are deliberately preserving the ambiguity to control the market. I think China's influence on the market will last.
