The supply and demand balance in the global long steel products market has become marginally worse for international business since June, although supply has started to react. Global crude steel production moved from an increase of 1.7 percent year on year in June to a decrease of 0.3 percent in July, with China’s crude steel output moving from an increase of 0.4 percent to a decrease of 3.6 percent in these respective months. However, global production in the January-July period was down only 0.6 percent year on year, which does not yet signal a meaningful rebalancing. The market situation in the coming period is extremely difficult to predict, particularly given the geopolitical developments affecting the Black Sea region and the Strait of Hormuz. International trade has become increasingly challenging. Demand remains generally subdued, while disruptions to supply and logistics are creating upward pressure on prices.

Energy costs rise significantly, overall environment increasingly inflationary

At the same time, energy costs have risen significantly. Natural gas prices in Europe and elsewhere remain at very high levels, with electricity prices following the same trend, while coal prices have also moved higher. Consequently, the overall environment has become increasingly inflationary. We, therefore, have an unusual combination of relatively weak demand and rising costs and supply-side pressures, which are creating considerable uncertainty and volatility in the international steel market.

China’s steel bar exports rise further, its real estate investments deteriorate

In the meantime, China’s real estate investments deteriorated from a decrease of 18.0 percent in the first half to a drop of 19.2 percent in the January-July period, with fixed-asset investments and infrastructure investments decreasing by bigger margins of 6.7 percent and 3.6 percent respectively in the January-July period, compared to respective declines of 5.7 percent and 2.4 percent in the first half. Steel exports from China in July remained above 10 million metric tons, with steel bar exports rising by 20.9 percent in July and by 12.3 percent in the January-July period. Together with the tighter EU and UK import quotas from July 1, this means a better balance inside protected markets but more displacement into the remaining open markets. The imbalance is being redistributed rather than resolved.

Higher costs begin to push EU prices upwards

Demand in the EU market remains weak, partly due to the summer season and the continued lack of activity in construction. A sudden increase in consumption is not currently foreseen, particularly as we move into the fourth quarter, which is traditionally a period of slowing activity. Nevertheless, sharply higher energy costs are now pushing mills’ prices upwards. Exceptionally low water levels on Europe’s major rivers have also increased transport costs for both mills and importers. Even in a weak demand environment, producers cannot continue absorbing these additional costs indefinitely. The current upward price movement is therefore mainly cost-driven rather than the result of any significant improvement in consumption.

US remains one of the clearer growth markets, but high interest rates still a major issue

The US is one of the clearer growth markets: domestic steel shipments increased by 5.3 percent in the first half of 2026, while steel demand is forecast to grow by 1.7 percent in the calendar year 2026, supported by infrastructure and technology-related investment. There is a gradual demand recovery in the US as well as strong infrastructure investment and continued AI investments. Meanwhile, imports are down 22 percent year-to-date. Supply in the US long steel market is moderately tight but has been moving toward a balance as of August. High interest rates are still a major issue for residential and commercial construction. However, rising domestic capacity and slowly recovering imports should gradually ease the supply pressure. Overall, the situation is better for US mills, but tougher for international suppliers. The US is going on its own path, at least until the results of the mid-term elections are announced. In the meantime, there are about 20 steel producers in the US announcing outages for September, October and November.

Global prices to remain driven by supply-side factors rather than by demand

From a pricing perspective, the main supportive factors are the prospect of reduced supply pressure from China, disruptions affecting trade in the Black Sea and the Strait of Hormuz, higher energy and production costs, and the increasingly restrictive trade measures being implemented in the US, the EU and the UK. Global production finally saw a slightly negative correction in July, indicating that mills are beginning to respond. In the EU, steel producers are announcing profits. Our expectation is that prices will remain under upward pressure during the next quarter driven primarily by the abovementioned factors rather than by a strong recovery in underlying demand.

Global steel demand foreseen to improve in 2027, but no broad recovery yet

On the demand side, the picture is less encouraging. Nevertheless, there is still meaningful demand in the Americas, while demand in most other regions appears broadly stable rather than deteriorating significantly. Looking at the global situation, India, Southeast Asia, Africa and select US construction segments offer the best opportunities for long steel products. According to market analysts, global steel demand is expected to improve further in 2027, supporting trade volumes and market confidence. These are positives for select markets and margins, but not yet evidence of a broad global demand recovery.

Ferrous scrap market still characterized by weakness

The ferrous scrap market is weak without much movement towards the upside as steel mills seek to avoid price hikes that would further constrict their margins.

Competition at reduced levels amid limited number of viable supply alternatives

Competition in the global long steel market is currently somewhat reduced, mainly because the number of competitive supply sources has become more limited. Trade restrictions, geopolitical disruptions, higher freight and energy costs, and difficulties in accessing certain markets have all reduced the number of viable supply alternatives.

Current market status very unstable, market highly sensitive to geopolitical developments

Under such circumstances, the current status of the market can be described as very unstable. The market will remain highly sensitive to geopolitical developments, particularly in the Black Sea and the Middle East.

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The overall business environment in the global long steel products market remains relatively stable. However, regional differences have become more pronounced than ever. Protectionist measures in the United States, combined with the implementation of CBAM in Europe and the upcoming reduction of EU import quotas, are reshaping trade patterns and market dynamics.

Ongoing conflicts continue to create uncertainty and raise costs

At the same time, the ongoing conflicts in Ukraine and the Middle East continue to create uncertainty, disrupt trade flows and influence supply-demand balances across multiple regions. Higher oil and natural gas prices have increased transportation and production costs, while steel availability from Gulf region suppliers has become extremely limited. Marine insurance costs for cargoes have also risen due to increased geopolitical risks. Expectations that these disruptions will be short-lived have largely disappeared. As a result, many distributors and stockists are holding onto inventories amid concerns about future supply availability and stock replacement costs. Consequently, the market remains highly fragmented, with conditions varying considerably depending on geography.

EU market sees last-minute import buying ahead of new quota system on July 1

In the European Union and in the United Kingdom, the market is now starting to search for a new equilibrium because of the changes in the import regime from July 1. During the past few weeks, some last-minute import buying has been taking place, as buyers and traders try to position themselves before the new quota system enters into effect. After this, market players will have to adjust their strategy to the supply which is actually available in the market. There will still be imports, of course, and there will still be competition, but buyers will have to build their strategies around actual market availability, not around the cheapest theoretical import offer.

Scrap prices remain strong despite weak demand

There is no demand to support the continuing strength of scrap prices, but it seems that prices will stay where they were before the Eid holiday or they may come down by a few dollars to motivate Turkish buyers to resume buying. Deep sea scrap prices for Turkey remain some way above US$400/mt CFR despite weak Turkish rebar sales, while the strong scrap prices provide support for finished product prices. Meanwhile, Turkish mills do not expect much long product demand from the EU because of the new quotas to be introduced shortly in the region. Regional differences will certainly create different results for different regions and producers, especially for those who source scrap from the US and the EU and need to export their products.

Turkey’s production costs may increase, political situation to impact investment

Turkish mills were enjoying cheap energy costs due to the rainfall during the winter season. This will most probably end when temperatures start rising and the country starts using cooling systems. With the political turmoil in the country, investments will slow down, which will also be another factor causing demand for long steel to slacken.

Demand for semis due to Iran’s absence contributes to higher long steel costs

Demand for semis due to Iran’s absence is another factor contributing to increased costs of long products. In this context, Chinese exports of slabs and billets increased to around 900,000 mt in the January-April period this year.

Long steel market in Germany remains very weak

The market in Germany is still very weak. After the shockwave of higher energy prices (the impact of the Iran war) and price increases for all steel products and for logistics, many projects were put on hold. Consequently, cut and bend prices did not move up but are on the way back down. Benders are desperately looking for orders at somehow manageable prices. German and Polish mills have had to adjust prices down as well, otherwise benders do not buy. So, there has been a drop of around €30/mt in prices despite the seasonal improvement which reflects the level of investment in Germany right now. Better prices for benders from imports are practically not available anymore. Reduced quotas, CBAM and high ocean freight rates make business very difficult. New building permits went down by 10-15 percent and industrial projects by 20-30 percent. There is not even any input from the public sector.

Mixed bag of positive and negative factors in US market

In the United States, inflation remains a concern, and expectations for interest rate cuts have largely been pushed back, with higher rates now expected to continue into 2027. This has negatively impacted housing and construction activity, keeping demand relatively subdued. Meanwhile, steel imports remain restricted by the 50 percent Section 232 tariffs, higher freight costs and logistical uncertainties. Reduced import competition continues to support a gradual increase in domestic steel prices despite overall moderate demand. On the other hand, domestic steel prices are moving closer to import parity, which may improve future import opportunities. In addition, inventories remain relatively low, and continued investments in AI infrastructure, energy and industrial projects are providing some support for steel demand. The primary area of growth remains AI infrastructure and data center investments, although this business is largely supplied directly by domestic mills and these big projects are for consumption of reinforcing steel 12-18 months from now. However, these positives are still overshadowed by geopolitical uncertainty, high interest rates and weak construction activity.

Some positive developments in terms of investments

One of the key positives in the marketplace is the substantial level of investment being directed toward infrastructure projects, energy-related developments and data centers, all of which generate significant demand for reinforcing steel products. In addition, many governments in developed economies are increasingly focused on addressing housing affordability challenges. Policies aimed at expanding residential construction could support additional demand for long steel products in the medium term. Another positive factor for certain markets is the implementation of measures designed to protect domestic industries from unfairly priced imports. While these measures support local producers, they also reduce market access opportunities for exporting countries, highlighting the differing impacts across regions. There are areas like the Balkan and Baltic regions where demand is really great and investment in infrastructure is huge.

China’s crude steel output decreases, its iron ore imports increase

China’s crude steel production decreased by 4.1 percent in January-April, but its iron ore imports increased by eight percent to 418 million mt in the same period, and port stocks are close to 160 million mt. This is a very strange situation: steel production is characterized by weakness, but iron ore imports remain strong.

Divergence between open and protected markets

Competition remains extremely intense in international markets that are open to imports. Excess production capacity in several regions continues to put pressure on prices and margins. In contrast, markets that benefit from trade protection measures or restricted import access generally experience more balanced competitive conditions.

Current market status stable and challenging, outlook varies according to region

Under these circumstances, the current status of the market can be described as stable and challenging. While demand remains generally subdued in many regions, market participants have largely adapted to current conditions and no major short-term disruptions are anticipated. The outlook, on the other hand, varies significantly by region. In Europe and the United States, market sentiment is relatively decent, supported by infrastructure spending and protective trade measures. In many other parts of the world, however, the outlook remains difficult to predict.

Supply side will need to be monitored if Middle East crisis is resolved

Even if geopolitical tensions in the Middle East ease, the resulting increase in availability of supply could place additional pressure on already oversupplied open-trade markets. Furthermore, the current interest rate environment continues to weigh on construction activity and investment decisions in several regions.

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