The 67th meeting of IREPAS (International Rebar Exporters and Producers Association) was held in Munich between September 30^th and October 2^nd, 2012. There were 80 producer representatives from amongst the 276 registered delegates from 37 different countries.

Ioannis Meimaroglu, the chairman of the IREPAS Raw Material Suppliers Committee, said that steel mills have been trying to secure their orders before finalizing their raw material purchases due to instability and difficulties in the finished steel market, which means that they have been obliged to change their strategy from working on stock basis to working mainly on spot basis. He went on to state that this is affecting steel scrap suppliers very negatively since they cannot collect material on a continuous basis, as they do not know at what price level the material will be sold when their customers come to the market.

Mr.Meimaroglou added that this situation is also posing problems for steel producers, as they can never be sure of steel scrap availability at the requested prices on spot basis.

Underlining that scrap suppliers need time to collect scrap and cannot meet demand from steel mills at short notice, Mr.Meimaroglu said that scrap suppliers understand the concerns of the steel mills and the uncertainty in the steel markets, as steel export destinations become more limited and as Chinese steel exports target steel mills’ traditional customers.

He added; it is also very important for steel producers to help keep their raw material suppliers alive, as the latter are facing pressure from finished steel
markets and also price competition in their domestic markets, as well as fluctuations in currency exchange rates and export regulations.

Michael Setterdahl, the chairman of the IREPAS Traders’ Committee, listed the economical crisis and Chinese exports as major concerns in the market, stating that macro decisions made by some governments, especially China,  have recently been impacting the steel prices more than the producers’ own pricing policies. Mr.Setterdahl added that as long steel production is low globally except for China and Turkey , the outlook for prices of long products in 2013 is positive and recapped the discussions by saying “Everything depends on demand and supply, as always.”

Uğur Dalbeler, chairman of both IREPAS and the Billet Suppliers’ Committee, stated that the recent news on Chinese supply has put some pressure on steel billet prices in the international market. However, he went on to say that the view of the billet suppliers’ committee is that downward price movement may not be seen, as downward pressure on prices is expected to be softened by the oncoming winter season. The IREPAS chairman stressed that the real issue for the producers is to achieve healthy margins in business. The committee agreed there are shortages of scrap and that this is the main reason why billet prices have not decreased further. He characterized the general situation in the global billet markets as being in equilibrium. In conclusion, Dalbeler emphasized that, the
difficulties in scrap collection during winter months will provide support not only for scrap but also for billet prices.

Mohammed Al Saadi, the chairman of the IREPAS Rebar and Wire Rod Suppliers Committee, mentioned that the local Turkish market seems strong, with demand at good levels in the market. While the situation in Qatar and other Arab countries seems healthy with high production capacity utilization rates, demand in these countries is also good on the back of ongoing investments and projects. In the meantime, whereas political issues in Syria and Iran have been affecting the business in a negative way, everybody hopes the situation will be resolved in the short term, Mr. Al Saadi said.

Mr. Al Saadi explained that almost 65 percent of the production in Europe, especially Italy and Spain, is exported, adding that the US and Carribean markets seem stable, while global market conditions in general are likely to continue in their current state until next year. The committee considers the main market
concern to be Chinese supply, which also has a psychological impact on business.

Notes to Editors:

IREPAS is a global association of producers and exporters of long steel products. It was founded by CELSA and GERDAU 29 years ago to develop understanding between producers, traders and consumers around the world. Today, IREPAS unites producers, traders, consumers of steel and professionals from the shipping and finance industries.

At the conclusion of the event, the chairmen of the committees for raw material suppliers, traders, rebar and wire rod suppliers and billet suppliers came together to share their view of the current state of the markets with the general participants at the meeting.

The Traders Committee chaired by Mr. Wilhelm Alff (Director-Stemcor AG), concluded that the demand in the US and in the European Union is very weak, especially for rebar and wire rod; in Europe inventories are low, and considering price volatility, consumers prefer to purchase from local suppliers but in limited volumes; and despite the efforts of the EU mills to reduce production to only 40 – 70 % of their actual capacity there is still an imbalance between production and demand. Mr.Alff said that even some new capacities will appear in the near future which will increase the necessity for existing mills to reduce production level further unless demand will increase substantially. He added that limited credit insurance increases risks for traders and limits trade volumes, and the fast growing Latin American markets, particularly Brazil, create opportunities for traders provided governments in the region do not take measures to limit imports.

Chairman of the Raw Materials Committee, Mr. Ioannis Meimaroglu (President-Helveco Intertrade SA), said that confirmed scrap exports this year will be at lower levels compared to 2008 and 2009 and at the same time the supply of scrap is expected to be less than demand. Given the question about what the scrap prices will be, Mr. Meimaroglu underlined that the replacement cost is the main issue for scrap suppliers. He warned that, pushing scrap prices further down would only result in decreasing the scrap quantities available, and that it is a very bad period to push scrap prices down.

Mr. Uğur Dalbeler (Managing Director-Colakoglu Metalurji AS), chairman of IREPAS and also chairman of the Billet Suppliers and Producers’ committees said that Russia, Ukraine and Turkey are the main steel billet exporters, while Russian and Ukrainian billet exports have declined as their domestic markets have strengthened. On the other hand, Turkey increased its billet exports by more than 75 percent year on year in the first eight months of 2010, since its rebar exports decreased by almost 40-45 percent in the same period. Mr. Dalbeler stressed the significance of the weakness of the US dollar, which limits price increases. Dalbeler also said that the approaching winter will limit scrap availability. However, he said that the lack of activity can be seen as an indication of an imminent increase in activity, and thus the outlook is still positive. On the billet side, Mr.Dalbeler said the conclusion of the committee is that no downward trend is expected despite the silence of the last three or four weeks. Business is expected to resume within a short period, the committee concluded.

The chairman of the Rebar and Wire Rod Producers’ Committee, Mr. Mohammad Al Saadi (Marketing Manager-Qatar Steel), said that levels of production activity vary according to the region. While Europe is weak in this regard, Latin American market is more lively, while the most positive market seems to be the Middle East. In recent weeks scrap prices have dropped and iron ore prices are expected to decline in the fourth quarter. Saying that the market will acquire clearer shape as China returns from its holiday, Mr. Saadi noted that in the Middle East market billet prices have reached the levels of rebar prices and that this situation limits the operating rate of local producers. However, the outlook for the last quarter of this year remains positive Mr. Saadi said, as he summed up the sentiment of the committee.

Notes to Editors:

IREPAS is a global association of producers and exporters of long steel products. It was founded by CELSA and GERDAU 27 years ago to develop understanding between producers, traders and consumers around the world. Today, IREPAS unites producers, traders, consumers of steel and professionals from the shipping and finance industries.

Traders’ Committee concluded the demand was low in the market in general, resulting in a situation of oversupply. Rebar and Wire Rod Suppliers Committee chairman Mr.Al Saadi sad that considering expectations that iron ore prices will further increase in the third quarter and given current demand levels, oversupply remains the main problem and it can only be solved by less overproduction in the short term.

Stating that the crisis had taught producers how to adjust their production to demand levels, the IREPAS chairman Mr. Dalbeler said that producers would continue adjusting their capacity usage in line with sales.

At the conclusion of the event, the chairmen of the committees for raw material suppliers, traders, rebar and wire rod suppliers and billet suppliers came together to share their view of the current state of the markets with the general participants at the meeting.

The chairman of the Raw Material Suppliers Committee, Mr. Ioannis Meimaroglou, said that in Europe/Black Sea region current scrap sales prices are lower than the cost of buying in new scrap supplies, adding that scrap prices are not realistic at current levels. The committee also declared that reduced finished steel production would not be detrimental to the market situation.

The Traders’ Committee, chaired by Mr. Michael Setterdahl remarked that demand is low in the market in general, resulting in a situation of oversupply. Mr. Setterdahl said that, China, with its rebar output of 350,000 metric tons per day mostly via consumption of iron ore, is pushing production costs up, as raw material suppliers keep on raising prices backed by high demand for ore, and this situation has an adverse effect on the global steel industry.

Mr. Mohammed Al-Saadi, the chairman of the Rebar and Wire Rod Suppliers Committee, said that low demand, coupled with high production costs due to higher iron ore and scrap prices, is putting pressure on steel prices. Considering expectations that iron ore prices will further increase in the third quarter and given current demand levels, Mr. Al-Saadi said that oversupply remains the main problem and it can only be solved by less overproduction in the short term.

The chairman of the Billet Suppliers Committee, Mr. Ugur Dalbeler, also the chairman of IREPAS, said that in the first quarter of this year rebar output rose by 35 percent as compared to the corresponding period of 2009. Stating that the crisis had taught producers how to adjust their production to demand levels, Mr. Dalbeler said that producers will continue adjusting their capacity usage in line with sales. The IREPAS chairman concluded by saying he expected activity in the industry to revive very soon.

Notes to Editors:

IREPAS is a global association of producers and exporters of long steel products. It was founded by CELSA and GERDAU 27 years ago to develop understanding between producers, traders and consumers around the world. Today, IREPAS unites producers, traders, consumers of steel and professionals from the shipping and finance industries.