The 76th meeting of IREPAS (International Rebar Exporters and Producers Association) was held in Budapest, Hungary on March 26-28, 2017. There were 107 producer representatives among the 352 registered delegates from 40 different countries. There were also 58 registrations representing 35 different raw material suppliers.

At the opening of the conference, Murat Cebecioglu, chairman of IREPAS said that the steel industry has once again succeeded in overcoming the significant challenges posed by the global economic situation, with the supply and demand balance in the long steel market continuing to improve in the US, Europe and Asia.

On the last day of the conference, producers of long steel products and steel billets, as well as traders and raw material suppliers, shared the conclusions reached at their special committee meetings regarding the current situation in the markets with the general participants at the event.

Raw Material Suppliers at IREPAS: Favorable outlook for scrap market despite geopolitical concerns

Jens Björkman, the chairman of the raw material suppliers committee, stated at the end of the 76th IREPAS meeting that the raw material suppliers have observed a big improvement in the scrap market because of reduced steel exports from China. He added that in the US steel production operating rates have increased significantly boosting scrap demand, with the outlook being very bullish.

Mr. Björkman indicated that Trump’s America First policy may lead the scrap markets to perform better, but the amount of scrap available for export from the US market may be reduced a bit. Commenting on the $1 trillion infrastructure spending plan announced in the US, he said that, since November, operating rates have already picked up due to stronger domestic demand and this was not because of infrastructure spending. He added that investment is also rising in the US irrespective of Trump’s pledge for $1 trillion in infrastructure spending.

The chairman of the raw material suppliers committee also added that industrial demand is picking up in the EU, supporting scrap demand in the region. He went on to say that demand for prime grade scrap is getting stronger, while making predictions about the market has become more difficult due to its volatility. However, he indicated that the outlook for the global scrap market in 2017 is more positive compared to the previous year, adding that he expects that the market will be favorable for scrap despite geopolitical concerns in the EU or elsewhere, such as Brexit or the referendum in Turkey.

Traders at IREPAS: The market has become very China-centric

Thomas Elford, representing the IREPAS traders committee, commented on China’s capacity reduction, saying that he has always been skeptical of its capacity reduction numbers, though he added that the situation feels more under control than it did in the second half of 2014, with Chinese exports now declining. He said that China’s capacity/production cuts have more to do with demand. Regarding China’s effect on the rest of the world, Mr. Elford said, “When China is strong, the world is strong, when China is weak, everybody is in a panic”, adding that the market has become very China-centric.

Commenting on the preliminary antidumping duty imposed by the US on rebar imports, Mr. Elford said that the US will continue to import rebar. Regarding the possible outcomes of Trump’s announcement of plans for $1 trillion in infrastructure spending, Mr.Elford said that this does not constitute real demand for the time being and these projects will take time to become a reality. He also said that he does not believe the infrastructure spending plan will have a huge positive impact on the global steel markets.

Mr. Elford also remarked that, during the discussions held by the traders committee, the probability of a wire rod shortage in the EU came up, in response to which Kim Marti of CELSA said that wire rod shortage is not an issue, indicating that the majority of the mills in southern Europe have been forced to export because of the lack of domestic demand, while adding that the mills are fully covered in terms of supply and can easily shift supply to their domestic market if needed.

Commenting on a question on the Algerian market, Mr. Elford said that the country is becoming a billet importer rather than a rebar importer, and also added that the traders believed the scrap-based EAF mills will have a cost advantage over iron ore-based mills for the next few months.

Steel Producers at IREPAS agree market sentiment is very positive

Murat Cebecioglu, chairman of IREPAS and also of the IREPAS producers committee, stated that the IREPAS producers committee agreed that market sentiment is very positive, with steel consumption increasing in parallel with GDP growth. He said that rising production volumes will not be a problem in terms of prices because China is not exporting as much as it used to.

Mr. Cebecioglu said that reduced exports from China have provided an opportunity for other producers: for example, Turkish mills have had a chance to sell to the Southeast Asian markets and he believes that as long as they continue to have a price advantage they will continue selling to these markets. Regarding the sales of Turkish mills to the UAE and Egyptian markets, the committee chairman said that in the UAE new capacities are coming online, which means enough capacity to cover domestic demand. He added that the Turkish mills are out of the picture because of prices. With the price structure today, it is not possible for Turkish mills to make profitable sales to the UAE, he said, while also noting the current trade case in Egypt.

Commenting on the preliminary duties imposed by the US against rebar imports, Mr. Cebecioglu said that Turkey will still be exporting to the US since demand is present. He pointed out that, as long as the final rates remain around the same range as the preliminary rates, Turkish exports to the US will continue. Nevertheless, he affirmed that protectionism remains a problem around the world, stressing that at the end of the day it hurts everyone in the market.

The IREPAS chairman concluded by saying that he does not expect much change following the referendum to be held in April in Turkey, given the healthy demand and many projects such as metro expansions and the bridge being built over the Dardanelles.