There were 123 representatives from 49 different producers among the 406 registered delegates from a total of 56 different countries. There were also 79 registrations representing 41 different raw material suppliers.

At the opening of the conference, Murat Cebecioglu, chairman of IREPAS, said that demand is still very weak in the global longs market and the situation remains difficult as mills are cutting back on production and protectionist measures are continuing full speed ahead, while China and other countries in Asia are exporting a lot, putting pressure on prices.

The IREPAS chairman added that there is very severe competition in the market, and every producer is fighting with its last penny in order to keep operating.

On the last day of the conference, producers of long steel products, 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: Global trade conditions are “devastating” due to uncertainty

Jens Björkman, the chairman of the raw material suppliers committee, said that, in the recent period, global trade conditions have been extremely difficult, describing the situation as “devastating” amid the current uncertainty. Pointing out that trade barriers and uncertainties continue to weigh heavily on the market, particularly with the US tariffs forcing some countries to find alternative destinations, he added that this shift has created pressure on other markets, including Turkey. Regarding the protectionism in the market, he stated that there are rumors that the EU will impose some duties on Asian materials due to the huge inflows of cheaper steel from the region. Meanwhile, noting that China, which is the main exporter of cheap steel, has signaled plans to reduce steel production and exports in 2025 and 2026, albeit the actual outcome remains uncertain, he said that, in the longer term, larger investments in EAF-based production are expected, supported by stable electricity supply and growing domestic scrap availability. China has also announced a cut of about 90 million metric tons in its steel production in 2025.

Highlighting that the planned green transition in the steel industry is increasingly being questioned, with many investments being cancelled and projects being delayed, Mr. Björkman stated that the EU’s move toward electric furnace-based production has now been postponed by at least three to four years. He underlined that, if carbon emission trading in Europe and the related pricing system are fully implemented, emission reduction technologies will need to be installed more widely. However, he said that, instead of hydrogen-based DRI, natural gas could be used in the short term. In addition, the raw materials committee chairman said EU waste shipment regulations treating scrap as waste will create more bureaucracy, especially for non-OECD countries needing formal approvals to buy European scrap, while OECD trade remains unaffected. Regarding the concerns over domestic scrap oversupply, he stated that Europe already faces excess supply overall, but certain grades like clean automotive scrap could face shortages. This imbalance, he explained, is why EU steel producers push to keep scrap within Europe.

Looking at Turkey, Björkman noted that the recent increase in freight costs has become a burden for suppliers, leading prices to increase slightly in Turkey, though how long this situation will last remains difficult to predict. Regarding the changes in Turkey’s inward processing regime, the committee chairman stated that Turkish mills, who are already struggling amid high costs, may become less competitive in the short term as scrap prices may increase slightly, leading the mills to reduce production.

Meanwhile, stating that raw material demand in the GCC market is expected to focus more on DRI/HBI, which remains limited in supply, he emphasized that larger volumes will be needed in Europe to support flat steel production and the green transition, though a mix of DRI/HBI and scrap is likely to be used.

Traders at IREPAS: Protectionist measures will continue for foreseeable future

F.D. Baysal, the chairman of the traders committee, said that China’s exports have increased at a much higher pace than its production. He stated that there are no expectations for production cuts in China and that its domestic stock levels remain at normal levels. In response to questions on how China is reacting to trade barriers, he explained that Chinese producers have begun investing in production facilities in other regions, including Africa and South America.

Looking at Turkey, Mr. Baysal said that the high cost of energy remains a key challenge for Turkish mills. He noted that, in order to save energy and comply with CBAM regulations, Turkish producers have started investing in solar and renewable energy sources, which are expected to reduce production costs. Meanwhile, saying that there are no clear plans in the EU to ease green transition requirements, though delays remain a possibility, he commented that CBAM will eventually be enforced, but significant work is still needed to establish reference levels for both European and overseas mills. He added that, despite uncertainties, European producers are already moving from blast furnaces to EAFs and investing in renewable energy sources such as solar to balance costs and meet future carbon requirements.

Commenting on protectionist measures, the committee chairman stated that the Trump administration’s tariffs, reaching 75-100 percent in some cases, have nearly halted steel imports into the US, while Canada and Mexico have also imposed strong protective measures, leaving the North American market heavily restricted. Stating that he believes that protectionist measures will continue for the foreseeable future, Baysal said that further barriers against cheaper Asian steel are likely, but stressed that free trade remains the best option, though current trends are moving in the opposite direction.

Regarding prices, he highlighted that the current spread between rebar and scrap prices stands at around $200 or slightly less. He suggested that this points to a likely regression in scrap prices. He also compared production methods, stating that blast furnaces currently hold a cost advantage of about $25/mt over electric arc furnaces as the latter depend on electricity prices, though these are lower in countries like the US. On freight, Baysal noted that container freight rates have come down from post-Covid highs of around $4,000 to about $1,200, adding that he does not expect them to fall further.

Producers at IREPAS: Chinese exports and protectionism squeeze global steel industry

Murat Cebecioglu, chairman of IREPAS and also chairman of the producers committee, said that, as demand is very limited, everybody is trying to protect what is theirs. “We can sell to the EU only once every three months because of the quota and it fills up as soon as the quota is opened. Because of China we cannot sell to many places. Chinese exports are hurting everyone,” he explained. The committee chairman pointed out that China is the main driver, exporting heavily at low prices, exerting pressure everywhere amid generally limited demand. Many countries are imposing protective measures not only on China but also on some other Asian countries, considering that the Chinese are quick to move their production elsewhere to avoid trade barriers.

Regarding Turkish mills’ capacity utilization rates, Mr. Cebecioglu pointed out that, under current market conditions, utilization rates are not at decent levels and, with protectionist measures still in place, Turkey has limited space to export, with only a few countries left, and competition is very tough in those countries. He also added that the countries to which Turkey used to export have become exporters themselves and this affects Turkish production in return. Turkey’s steel production capacity stands at around 60 million mt, but the country is currently producing just 38 million mt. In addition to trade measures, China is exporting heavily all around the world and, as it is difficult to give low prices to compete with the Chinese, in the end Turkish mills have to cut production, he remarked.

Commenting on China’s work plan for the steel industry in 2025-26, the IREPAS chairman underlined that the Chinese are always coming up with some kind of plan, but it is yet to be seen how much of it will be implemented and how they will proceed. This work plan, he noted, consists of many things; regulations, environmental constraints, shutting of inefficient mills, and technological upgrading for green steel and low carbon production. In the end, future competition will depend on being cleaner, he stressed. He also commented that, if this Chinese work plan goes through, it will mean that there will be export regulations, leaving room for Turkish mills to breath.

Talking about the mega projects in the GCC region, Cebecioglu said that demand is quite good in the region and GCC-based mills are also exporting to the EU and North African countries, where they are very competitive against the Turkish mills. As GCC mills have lower costs compared to Turkish mills, they have the upper hand in prices in terms of costs.

The global long steel products market has mostly entered the holiday period. In many markets, business will start moving only after January 13. Many uncertain factors lie ahead for the post-holiday period, including the situation regarding Chinese exports, the actions likely to be taken by the new US administration and the difficulties faced by the steel industry in Europe.

Chinese stimulus measures so far not expected to have huge impact on exports

In the short term, the Asian markets are speculating on the positive sentiment from China, but it is hard to see how it will convert into real upward movement. It seems the Chinese government is going to make another attempt to increase liquidity to stimulate domestic demand. However, domestic prices are still very low in China and so the potential short-term impact on exporters will probably be limited and they will not change current export volumes until the Chinese steel industry slows down production. However, Chinese Premier Xi Jinping has pledged that China will meet its ambitious GDP growth target of five percent this year and remain the engine of global economic expansion, and so no production cuts would be anticipated. As a result, steel prices in the international markets, except in the US, will suffer going forward.

What are the prospects for Chinese steel exports in Q1?

The important sectors in the Chinese domestic economy, steel in general, and construction and manufacturing, are all in deflationary mode. Steel exports from China have increased during the fourth quarter. It is yet to be seen if Chinese exporters have already booked export orders for the first quarter. They may not have full export order books as demand and prices from overseas customers have fallen further and quantities are less.

Energy prices in Europe surge to 2022 levels, mills announce shutdowns

In the meantime, energy prices have surged to very high levels again in Europe, levels not seen since 2022, and mills in the region have started announcing shutdowns. Usually, this would push prices up but in the current low season we have to wait and see what happens.

Weak demand in Europe, luckily prices have not fallen even further

The market in Europe is still extremely challenging. Domestic producers are holding prices low to fight against imports and to collect any orders they can. But there is no way for them to reduce their prices further as their costs simply do not allow that. Demand is very weak. Many benders are still accepting long-term projects at price levels which do not correspond to current replacement costs. Mills are taking measures to reduce offers by working shorter hours or stopping liquid steel production for a few months. Nevertheless, it is a good sign that prices have not slid down any further despite the approach of the end of the year.

New US administration may trigger even greater difficulties for global long steel trade

Trade in the global long steel products market may enter a period of even greater difficulties with the change in the US administration. Proposed additional duties may trigger other countries to retaliate and it may soon become more difficult to trade globally.

Difficult winter anticipated for US domestic steel market

US domestic mills have been keeping prices low and are still offering discounts on already low prices. In addition, most US buyers, not trusting import price guarantees, refrain from ordering their usual quantities. Interest rates have eased a bit, but are still on the high side for investments. In short, a not so pleasant winter is expected in the US steel market. On the other hand, US domestic scrap pricing for December is expected to be down, for the first time in two decades.

Market is unstable with difficult and unpredictable outlook

Under these circumstances, the situation in the global longs market, where competition remains very tough and more local than global, may be described as unstable and complicated with a difficult unpredictable outlook.

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The supply and demand balance in the global long steel products market is becoming more unstable, with China now actively moving steel billets at the lowest prices. Finished products from China continue to dominate most markets, both in the long and flat segments. Even though there is a lot of material being offered in the market, it seems that the current raw material price levels are supporting prices. What we are going through today keeps reminding us of what the market went through 10 years ago. So far, there is no sign from China of a slowing down of production or of exports. If the Chinese continue in the same way for another year or two, it will surely cause big damage to the global steel industry.

Weakness in Asia continues to undermine global steel markets

The weakness in Asia, most importantly in China, continues to undermine the steel markets. Due to low capacity utilization rates and excess stocks of raw materials at Chinese ports, BOF-based producers managed to push through lower prices for iron ore and coke, which in turn helped to push down the prices of finished products. The weakness in Asia is continuing to spread to the rest of the world.

Scrap costs increase for EAF-based mills

For EAF-based mills, the situation is the opposite. Because of the changes in the quota system in the EU, Turkish mills managed to sell good quantities of material to the region. But the scrap market is very tight. So, just a few purchases of scrap have pushed up prices in the scrap market, at least for the time being.

Will scrap remain so costly? Will China take steps that will change the market dramatically?

Going forward, demand remains weak, EAF-based mills struggle to compete with BOFs and it is hard to imagine how scrap can remain so expensive. The weakness in China is built into market expectations all over the world. Unless the central government in China comes up with measures that would change the market dramatically, it is hard to imagine how the market might improve.

Demand at very low levels in Europe, global freight prices stable and competitive

Demand in Europe seems to be at the lowest levels, with no sign of any improvement. The freight market seems to be stable, with competitive fares.

Turkish rebar exports up 15 percent from 2023, but still down from previous years

Turkish rebar exports are up by 15 percent (1.5 million mt) compared to last year, but they are still down 20 percent compared to the year before and less than half compared to the previous usual export volumes of 6-7 million mt per annum. The absence of the Israeli market for Turkish exporters will be felt more sharply in the second half of the year

Longs prices in US under pressure from domestic competition, but margins still healthy

As for the US, business conditions have not changed, but due to the Fourth of July holiday week and the July vacations, most buyers have been reluctant to make big purchases. Commercial and residential construction is still slow due to high interest rates, but infrastructure projects continue at normal speed. Long product prices are under pressure from domestic competition rather than from imports.  Flat product prices have kept going down even more than long products, but this situation may change soon. US domestic mills still operate with very healthy margins in spite of the competition.

Competition stable at high levels, Chinese leave little breathing space

The competition in the market is stable at high levels, with Chinese exports leaving no breathing space for others.

Market very unstable, outlook not so promising, question mark over China

Under these circumstances, the market is quite unstable and fluctuating, with a not so promising outlook, as nobody can foresee what official decisions will be taken in China in July.

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The supply and demand balance in the global long steel products market has not improved compared to previous months. Unfortunately, the positive expectations after the Chinese New Year holidays have not materialized. It seems Chinese exporters will continue to be aggressive, which of course will also drive other Asian exporters (Japan, Vietnam, Taiwan and South Korea) to adopt a similar stance. If we look at the EU import statistics, we see a massive shift towards Asian suppliers. On the other hand, demand is not picking up as the market had anticipated or hoped, which puts pressure on both prices and production. However, the markets still hold positive hopes for the second half of the year.

Chinese real estate sector in deep trouble, Chinese exports may surge again

Two major Chinese developers, namely, Evergrande and Country Garden, are in deep financial trouble. There are some worrying rumours of infrastructure projects being cancelled due to the lack of funding. Iron ore with 62 percent Fe content is trading at around €116/mt and coke prices have dropped as well. This weakening of raw material costs brings many mills in China into positive territory. The pressure on Chinese long product mills is mounting and, if the rumours of the cancellation of infrastructure projects materialize, this could cause a surge in Chinese exports, supported by reduced raw material costs.

EU market very quiet amid reduced residential construction in northern Europe

The EU market is very quiet as residential construction has declined substantially in northern Europe. There is very little activity and prices from domestic mills are as stable as a rock. There is some increase in imports including unusual origins such as China, Oman and the UAE. Other sources are not able to compete with domestic offers.

Situation unchanged in US but higher interest rates a problem

As for the US, the situation is unchanged. However, the earlier optimism that the interest rates would come down sooner has vanished. Commercial and residential construction has not picked up and any improvement will have to wait until the summer. Government-funded projects were also affected by the lockdown of finances by the House of Representatives, which have just been released. There are discussions about converting empty office spaces to homes to cover the home deficit, which will not help the steel industry. Auto sales are also affected by the interest rates and are flat. In short, we are on hold for the next two moves of the US Federal Reserve. Rebar prices are steady but face downward pressure with lower raw material costs. Due to higher shipping costs, imports are not as competitive. HRC prices are still on a downward trend, which is affecting all steel futures. Slow economic activity in China after the Lunar New Year holiday and the lack of prospects for a quick easing of interest rates in the US have put pressure on commodities worldwide.

Turkey struggles in markets where it was formerly dominant

Turkey is competing on many fronts. Asian, GCC and North African exporters are now exporting heavily to markets where Turkey used to be dominant.

Lower raw material prices the only good news for steel mills

Iron ore prices have hit a six-month low, while ferrous scrap is being generated in decent volumes in the US, which has meant more tonnages destined for export. In Europe, the slow economy has reduced ferrous scrap flow and also demand from the steel industry which is struggling with poor order books. The only good news for steel mills nowadays could be that the raw material prices, both for iron ore and scrap, are going down. Also, lower activity means lower volumes, reducing supply pressure on the markets.

State subsidies for climate action to be a major issue for years to come

One of the main topics for market players to discuss for years to come will be the definition of state subsidies related to climate change, because it looks like this issue will definitely be used for the next level of protection measures. 

Competition remains local or regional

Competition is still mostly local or regional rather than global due to existing protectionist measures and it is strong where such measures do not exist.

Status of markets generally unstable, outlook slow and unsatisfactory

Under such circumstances, the current status of the market can be described as unstable in many markets or stable at a low level at best. The outlook, unfortunately, is slow and unsatisfactory.

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The global long steel products market is still characterized by unpredictability. China’s impact on the global markets is still an open question and this contributes to the unpredictability for the second quarter. It seems that customers heard too much talk of recession last year and were convinced that all construction would stop in 2023. Actually, it looks like Europe managed to avoid recession in 2022 and even in January Germany showed economic growth. Core inflation is going down and the situation looks much better than expected in Europe and the US.

European market still extremely quiet after the holiday period

The European market is extremely quiet since all clients have just come back from the holidays. Mills are not able find customers as they had all bought their requirements by the end of November in order not to be taken by surprise in the new year. New private housing projects in Germany have almost fallen to zero. The high costs of products combined with 8-10 percent inflation and consequent higher mortgage rates in addition to the lack of workers have made calculations unpredictable for investors. Moreover, the government has reduced funding for social housing despite its declared goal of building 400,000 apartments every year. Last year, they reached approximately 50 percent of that goal and for this year the expectation is even significantly less. On the other hand, public and industrial projects are still fine, but increasing costs, bureaucracy and appeals against every new big project of whatever nature as well as the lack of labour force delays for almost every one of them.

Overcapacity in EU cut and bend sector, price rises difficult, imports coming from N. Africa

Overcapacity prevails in the cut and bend industry in the EU. But instead of slimming down, market players bid for every deal even if they speculate on a price drop of €100/mt. The behaviour of a few players is pulling the whole market down and still leaves no room for producers to increase prices. There are imports of wire rods coming to Europe, but instead of Asia they are now arriving from North African countries like Algeria, Egypt and Tunisia. The volumes are enough to keep the market prices suppressed. At the same time, however, the EU import quotas are in general not approaching anything like maximum utilization.

Situation in North America quickly becomes positive

The situation in North America has become positive very quickly and business in the US market is stable. Most of the sales are closed by domestic mills, due to the very competitive prices offered, and also as almost all new infrastructure projects have a “Buy America” clause. Steel mills have had an uptick in orders at somewhat higher prices, which have mostly been driven by scrap price increases. Turkish buying ahead of the January buy-week helped drive up scrap prices in the US. US ports are still congested, making imports even more cumbersome. Whether real hard consumption will also provide support is an open question. The mills in the US are saying that infrastructure consumption increases are yet to come, starting in the second half of the year.  Imports are priced at levels which do not support a switch from domestic products to imports, while lead times are also “normal” for domestic materials.

Question mark remains over demand in Latin America amid political instability

Elsewhere in the Americas, in general the good news is fewer aggressive offers from Southeast Asia for all products. Meanwhile, there is still a big question mark over demand in Latin America due to the political instability in several countries in the region. Some traditionally non-exporting countries in Latin America have started to look to the international market in the past few months.

All Turkish mills are struggling to export

Currently, all mills in Turkey are struggling to export. Strong competition from Egypt, Algeria, Tunisia, Malaysia and Indonesia and offers heard from GCC countries are making it very difficult for Turkish mills to export. Of course, on top of all that, protectionist measures such as quotas, Section 232, normal values and AD/CVD rates make exports almost impossible. Increased energy costs and higher scrap prices are also putting pressure on prices and make it difficult for Turkey to compete.

Devastating earthquakes in Turkey and Syria also hit steel sector in Iskenderun

Devastating earthquakes hit southeastern Turkey and northern Syria on February 6. The fire which damaged Iskenderun port will hamper trade from the region. Following the natural disaster, market players will have to wait and see, but in the very short term mills in the Iskenderun area are not receiving energy for their production activities.

Raw material and scrap prices rise after New Year holiday, demand rebounds strongly

Raw material costs are very high and scrap prices rose unexpectedly after the New Year holiday. Another important factor is that scrap prices in Russia went up and for the first time in a long while Russian mills are not aggressive in exports. January indeed saw a strong demand rebound for raw materials. This was led primarily by China, which dramatically removed its remaining Covid restrictions and also stimulated its economy.

Stronger production rates in January as recession seems to have been avoided

While the markets had been optimizing for recession with low inventories and lower production rates towards the end of last year, January saw stronger production rates as an energy-induced recession seemed to have been avoided. Energy prices fell as well as logistics costs. Buying activity was much stronger as inventories were depleted and had to be reprogrammed for stronger production rates. Both of these factors on top of decent demand levels contributed to rebounding raw material prices. Europe looks much better than previously expected. Also, energy in storage is at high levels, while the weather has been fairly mild.

Temporary absence of Chinese export offers amid local market improvement

China is back from its New Year holidays, and so there is some activity. The small signs of an improvement in the Chinese market have led to a temporary absence of its offers from the international market. Furthermore, energy and logistics costs have declined a little, providing some relief to many players in the market.

German and European domestic prices equal to or lower than import prices

In Europe, German domestic and other European prices are lower or equal to import prices. Imports are almost at a standstill as can be seen from the utilization of quotas. As there are almost no imports, this leaves room for domestic mills to raise their prices as soon as seasonal demand picks up.

Competition again becomes more regional

Following the aggressive presence of Asian countries in export markets at the end of 2022, it is reasonable to say that competition has once again become more regional. However, there is still strong competition for Turkish producers as there are not many places where they can sell their products.

Current status of market still unstable and fluctuating

The current status of the market is still unstable and fluctuating. No one can predict the level of raw material and energy costs going forward this year. Plans may change instantly.

EU’s CBAM to start to have an impact later this year

Another aspect which importers in to the EU market must face shortly is the EU’s Carbon Border Adjustment Mechanism (CBAM). Although there is still some time before it will be a real cost factor, the bureaucratic hurdles will start in October this year.

Market outlook remains unpredictable and challenging

Under the above circumstances, the outlook for the global steel long products market is unpredictable and challenging, though everything points out to a market turn any time soon, at least in the EU.

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Some oversupply is observed here and there in the global long steel products market. The market situation is getting worse. In particular, there is a vacuum in Western markets due to the war in Ukraine. Price hikes were very rapid and very steep, which could be a reason. Energy prices have negatively impacted manufacturing, especially in Europe. Inflation is another factor which has also been having a negative impact on consumption, though it is still difficult to comprehend why the market has been so silent during recent weeks and to understand what has been causing prices of scrap to drop by such significant margins.

Reinforcing bar mills in EU in good position to keep prices at high levels

Reinforcing bar mills in the EU are in a good position to maintain their prices at high levels despite lower demand and internationally weakening prices, as Turkish and Algerian imports have been out of the market since quotas expired as of early April.

Lack of clarity in EU on lifting of safeguards or quota increases for some products

There is still no signal from Brussels regarding the lifting of safeguards or increases in quota volumes for certain products. Hence, offers are expected to stay tight. Brussels is responsible for the detrimental usage of the “all other countries” quota in April because of the strange handling of the Russian and Belorussian quotas.

Scrap price premium shrinks in April influenced by Russian semis supplies

The pricing premium on ferrous scrap, which was an effect of the Russian invasion of Ukraine, deteriorated during April as Russian semi-finished products have been able to find destinations in Asia and Turkey via trading intermediaries. Russian ferrous materials trade at a steep discount to other suppliers, with fewer destinations available. The March war premium was lost in April despite the war continuing and despite continued disruptions amid the ongoing brutality of the invasion.

Intra-European trade at good levels

Demand remains good in intra-European trade where supply in the long product market is insufficient compared to demand.

Strong dollar puts pressure on commodity and ferrous metals sectors

In uncertain times, a safe heaven is provided by the US dollar, which has been trading at a five-year high against the euro. This has been putting pressure on the commodity and ferrous metals sectors as well.

Chinese lockdowns put pressure on global raw material prices

There has been a slowdown in China due to the Covid lockdowns and property developers still being in trouble after the Evergrande crisis. The majority of the Chinese population is still affected by lockdowns due to China’s zero Covid strategy. The lockdowns have also had a negative impact on demand and prices, with global raw material prices coming under pressure.

Margins for producers and users still very good, post-Covid situation in West a positive

The margins for producers and users worldwide are still very good, with Ramadan now over and production growth in China still negative. The pandemic is almost over, at least in the Western world. The post-Covid situation in major markets remains a positive, which boosts consumption.

Russian exports disrupt pricing, war in Ukraine contributes to uncertainty

Competition in the global longs market remains very regional due to trade measures. But Russian exports have been causing significant disruptions as far as pricing is concerned. The war in Ukraine and the worldwide uncertainty does not help the markets to resume their normal business mode. The situation is very challenging when trade is very intermittent and so competition is not very intense.

Market situation unstable though outlook satisfactory despite challenges

The current situation in the market can be described as fluctuating and unstable as market demand is intermittent. The outlook, however, is still very good and satisfactory despite being challenging in certain regions.

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Demand is picking up in the global long steel products market after the holidays and it will be even better once the weather becomes warmer in the northern hemisphere. It seems the market is getting back to normal. Section 232 is practically over. General demand is strengthening with the pandemic possibly coming to an end. Bottlenecks seem to be easing somewhat, such as breakbulk freight rates, which have returned to more normal levels. International trade has resumed, bringing confidence to the market. Covid restrictions are being removed. At some point, automakers’ chip shortages will come to an end and this will boost car manufacturing. Market players are looking forward to seeing how raw material prices will settle this week after the Chinese holiday, though the situation so far seems to be positive.

Integrated mills still hold an advantage over their EAF-based counterparts

Steel consumption is still excellent around the world, while the ferrous scrap market has strengthened since the New Year. Input costs for both integrated and EAF-based mills have increased in a similar fashion. However, the advantage still lies with the integrated mills. The relatively high prices for ferrous scrap, along with increasing prices for non-ferrous scrap, are expected to keep the flow of obsolete scrap at elevated levels. Raw material demand is increasing and is expected to drive costs everywhere, along with energy, with EU steel producers contributing significantly to this increasing raw material demand.

Steel producers start announcing green initiatives

Global attention is shifting to steel producers announcing green initiatives, and so now we are all on a three to four-year road to change. Green changes are primarily for local and somewhat regional markets.

Spread between rebar and hot rolled flats mostly returns to historical normal level

The spread between reinforcing bar and hot rolled steel sheet in coil prices is returning to the historical normal level of less than $100/ton in every region, except the US and Canada.

Energy costs remain biggest issue facing producers

Energy is still the biggest issue nowadays facing producers and costs are double compared to the previous year with energy prices reaching all-time record high levels. Costs of raw material will also be another item to deal with. The geopolitical situation is also unstable.

Demand reasonable for EU mills, supported by mild winter weather

Demand is reasonable for EU mills as there are some serious projects in the Mediterranean region. The extremely mild winter in Europe has not interrupted construction yet. All yards are running at 100 percent and mills are nicely booked with orders. Building companies are still trying to push cut and benders down with prices, but the resistance of more and more benders gives hope that bending prices will rise very shortly. Almost every EU market is performing well, and imports are more and more regulated or are not available. Buyers have almost no option. International demand is also either going up or is strong at least, despite the winter season.

Prices soften in US, contrary to global trends

However, the situation is very different in the US from that in the rest of the world. While the rest of the world is experiencing price increases, prices in the US are still softening. Though the US market is coming from much higher prices, the further softening of prices is confusing. Demand is still strong, but the fear of further price reductions keeps distributors from making future commitments. After the EU, the lifting of the Section 232 measures from Japan may not help expectations. However, if the reduced quotas are also applied to Japan as was done in the case of the EU, the effect may be minimal. The US-EU agreement on the removal of tariffs has strengthened EU demand, though it has been a slight negative for US producers during the past month. Expectations in the US are for price stabilization soon and slow price increases to follow due to the inevitable high inflation with low interest rates.

China to produce less steel in 2022, good news for other producers

China has stopped increasing steel production and Beijing’s policy is to produce 100-150 million tons less steel in 2022 than in 2021. Steel demand is still strong in China and exports are not of real interest to them. Chinese steel exports are firmly below six million tons per month. Furthermore, the Chinese government seems to be proposing more infrastructure investments. If China does not produce as much as it did in 2021 and if exports do not increase, then all other suppliers will have the chance to export to Southeast Asian and Far Eastern markets as well. Another major positive is that, if less steel is produced, it will create a mini boom in import demand from mainland China. Also, China’s stimulus in December brought production back in line after the Evergrande debacle, which boosted sentiment.

Levels of competition are reasonable, Turkish mills struggle to compete in Asia

The levels of competition in the market are reasonable. The competition in the reinforcing bar segment is between Asian and Gulf countries as it seems that Turkish mills have difficulty competing at the buying prices seen in Asia.

Outlook very good for an overall strong market

The current status of the market can be described as very stable and strong, perhaps with the only exception of the US for the time being. The outlook is very good and satisfactory.

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In the global long steel products market, there are signs that supply has caught up with demand and that the supply-demand balance is becoming more neutral. The market seems to be getting back to normal in terms of lead times, prices, etc. We are now in a period where things have to get back to normal, which in fact may be different from where it all started. A price range higher than the beginning of the fourth quarter of 2020 will probably be the new normal. On the other hand freight rates are still incredibly high.

…but Section 232 and EU safeguards still in place

The supply-demand balance seems to be back on track, but of course with the caveat that Section 232 is still in force as well as the EU safeguards, which make supply in both places shorter than necessary. The protected markets will continue enjoying their positions until the measures in question are terminated.

Slowdown in Far East a blow to the global longs market

We should also be following the Southeast Asian and Far Eastern markets. The slowdown in the Far East has dealt the market a strong body blow. The Asian markets are making adjustments, but most would say that everyone is happy over there. The Indian and Vietnamese mills are exporting, while new plants in Indonesia as well as the Japanese mills are making historic profits. South Korean mills most likely will do the same. The Russian mills located close to the ports are still paying their export tax and continuing to export.

EU cut and benders face rising stocks

The stocks of the cut and benders in the EU are being filled up more and more and a number of projects are being put on hold or being delayed due to the high prices for all sorts of construction materials including deformed reinforcing bars. The cut and benders are feeling a significant drop in order income and are holding their breaths to see how the EU mills will react to fewer order entries. But with the holidays ending, stronger demand is expected before the winter starts. As a result, no meaningful drop in EU mills’ prices is expected, especially due to the lack of alternatives from imports. Most of the cut and benders have been managing the drastic price increases so far and low-priced projects are fading out.

Supply seems to be catching up with demand in US market also, imports still difficult

Demand in the US is high, but supply seems to be catching up with the demand in this market as well. There are still some shortages, especially on the West Coast.  However, it is difficult for imports to fill the demand shortages due to shipping constraints. With the erratic and historic high shipping prices, most mills prefer to offer on FOB basis. Importers who buy on FOB basis on all occasions are in for a surprise when cargoes are ready to ship. To add to the problem, most ports are full and do not wish to receive more cargoes. Especially for rain-sensitive cargoes, indoor storage space hardly exists. With all these high prices, credit has become an issue for importers. Hardly any buyers have full credit to insure the receivables.

Freight rates out of touch with reality, no one wants to book on FOB basis

Freight is a major factor nowadays. Even for the traditional routes, freight rates have lost touch with reality. Traders have been punished by the high and unpredictable freight costs and are now careful as regards new business. No one wants to book on FOB basis. It is getting more and more difficult to get a quotation, which makes it difficult and/or risky to offer on CFR basis as well. This situation will create short-term downward pressure on prices and long-term shortages in importing countries. Regionalization is the current trend as sea freights are exceptionally high.

China’s steel output restrictions may buoy up steel pricing

China’s restrictions on steel production at 2020 levels will mean stronger Chinese demand for semi-finished steel imports, which should support other regions, especially ASEAN producers. It could also buoy up steel pricing. China’s announcement of production cuts is welcome amid environmental concerns and may support worldwide billet prices, but it may also put further pressure on ferrous scrap prices due to less demand. Most Chinese production is based on iron ore and has already gone down a notch, and so the impact on ferrous scrap may be limited.

Europe impresses with steel production performance in January-July

European steel production strengthened during the first seven months of the year at a stronger pace than production in many other regions. Scrap demand in the intra-European market has been stronger than normal, and this situation seems set to continue for the coming quarter. Semiconductor and component shortages continue to weigh on industry. Supply of higher quality scrap grades and industrial scrap has become tighter.

Coronavirus vaccinations should support demand levels

Although the number of Covid cases is still high and we are again entering the season of colder weather in the northern hemisphere, the post-pandemic rebound and reopening are continuing despite setbacks due to the Delta variant of the coronavirus. The vaccination process will surely allow us to continue with our daily lives and so demand should continue.

Insurance becomes an issue due to increased value of cargoes

Demand is still good and mills are booked for the next few months. Moreover, huge investments are on their way. Payments seem not to be a problem even though insurance is becoming an issue simply because the value of cargoes has reached very high levels.

Future looks promising due to planned infrastructure investments worldwide

Almost all countries are looking at some type of stimulus plan, with infrastructure being high on the list as it is the easy choice. Money is easy to print for the US and the EU, while all others have to borrow at somewhat reduced rates. Stimulus money is still flowing and infrastructure spending in particular looks to continue for several years in the EU/ UK and North America.  Nevertheless, the future looks promising for infrastructure investors. It is also a good time to be melting domestic scrap and selling long products regionally.

Competition starts to normalize

The competition in the market is also expected to get back to normal, with demand reaching pre-pandemic levels. There is strong competition between Turkish long product exports to Asia and Asian-produced material. Otherwise, competition is normal and acceptable. As for the ferrous scrap market, there is regionalization and competition is strong in general,

Overall situation stable in global longs market

Overall, the current situation in the global long steel products market can be defined as stable and perfect to proceed, with some fluctuations here and there.

Satisfactory outlook for next quarter in EU, some price cuts possible in North America

For the most part, there is very little steel to be sold during September, October, November and December. The outlook for the next quarter is satisfactory in the EU, as for the ferrous scrap market. However, some downward adjustments in the North American market may be seen and negativism is bound to spread and may affect other markets. Accordingly, it may be time to wait and see or to proceed with caution in some markets.

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Overall, the global long steel products market still looks positive, supported by strong demand, even though business has become more difficult due to higher logistical costs and time delays in getting goods from one place to another. Exporters are all under pressure due to the increase in freight costs. Container shipments are also very problematic. The only steel moving long distances seems to be Turkish steel and Asian flat rolled and coated products, which are heading everywhere.

Strength of demand remains a major supporting factor as economies rebound

Some regions and countries continue to enjoy strong demand, in particular, Europe, the US, Canada, the UK and Israel. Mills in these locations remain sold out far into the future. Steel is only a small part of the demand shock caused by economies rebounding, unprecedented stimulus packages, and logistic and supply chain disruptions. The steel supply side is catching up at a slow pace and supply shortages still continue to be seen across the Western world, especially in the US. It looks like this extra demand may continue at least until the end of the current year.

EU safeguard measures and Russian export duty to provide huge support for prices

The extension of EU safeguard measures is another issue that will have an impact on prices, in addition to the export tax on Russian goods. Russia’s imposition of a 15 percent export tariff may further restrict supply to the international market. The impact of the new export tariff in Russia remains to be seen. Most Russian mills are booked out for the next couple of months, allowing them to be in no rush to sell, and so they are keeping their prices more or less steady. The market seems to absorb the thought that producers in Russia will absorb all of the new export duty. All these factors provide huge support for prices.

Global steel output continues to rise, China upbeat after July 1 CPC anniversary

Worldwide production, including China, rose by 15 percent in the first four months this year, which may put pressure on prices. After the Communist Party of China celebrated its 100th anniversary on July 1, China came back in a positive mood.

Rebar demand in Turkey hit by high interest rates and inflation

Turkey is still struggling with high interest rates and inflation, which have put pressure on rebar demand. Although Turkey’s export volumes in the first half were up by 16 percent, this was not enough to bring domestic producers into the comfort zone.

Demand hits record-high levels in Europe, but steel users left in dire straits

Demand in Europe is still very strong and prices for deformed bars, wire rods and mesh have been reaching all-time high levels. The unchanged extension of the EU safeguard measures for another three years was certainly unexpected.

The EU has followed the example of the US which still has its Section 232 restrictions in place. The downstream industry in Europe was not able to find much support in Brussels, which has decided that the threat of trade deflection is still too high for Europe. It is now hoped that once the US changes its legislation, the EU will follow as well.

On the other hand, not only are prices a huge problem for the industry, but also more and more the reliable availability of steel is a big issue. Demand is still high but users are still suffering from supply problems and the new quota for rebar imports into the EU was almost completely consumed within the first week of the new quota period.

Extremely high freight rates contribute to regionalization of trade

Freight rates are extremely high for all forms of transport, which makes long distances difficult for ferrous scrap as well. Strong intra-European demand for scrap and steel as well as historically high scrap-to-steel spreads has continued to regionalize trading. It has also driven up the price of shredded as compared to HMS in the international markets. Demand levels remain elevated into the autumn, which will likely mean a continuation of stronger consumption in Europe than normal. Ahead of August, we may even see a negative impact in Russia as exporters scramble to move material to ports.

Life getting back to normal in northern hemisphere, high consumption levels seen globally

Summer has begun in the northern hemisphere and life is getting back to normal. Inflationary pressures seems to have lost some momentum after a period of strong producer prices. All markets worldwide are running well on high consumption levels, and there is still not sufficient material available to complete restocking.

Spreads between scrap and steel remain very strong

Iron ore prices are in a trading range of $210-225/mt.  Ferrous obsolete scrap is abundant. New production material and shredded scrap remains in very high demand in Europe and the US, with strong spreads over obsolete scrap. There are unprecedented spreads between shredded scrap and HRC. Long product spreads are significantly less, but are still twice as high as what a normal market might enjoy. The good times continue for steel producers, while consumers continue to sit at the table and eat whatever is served to them.

Main competition between steel consumers, not producers

Competition on the supply side is very reasonable. Price competition is between Turkey, India, Vietnam and China. Nowadays, the competition is between steel consumers and not steel producers.

Market situation generally positive and likely to remain so next year also

The market seems to be quite stable with a very satisfactory outlook. Overall, the market situation still looks positive and it seems it will continue positively next year as well.

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Demand in the global long steel products market has continued to increase recently, and particularly demand in China and developed economies continues to push the market up. At the same time, international supply has tightened even further. Most mills are offering a few months ahead, thereby contributing to upward movement of prices. There are imbalances in rebar supply-demand, but it looks like customers are resigned to accepting the continuing price increases. The spreads on production have increased overall.

Strong demand and short supply in EU, construction companies squeezed by high prices

Demand in the EU remains strong, but the market is short of steel. Construction companies have tried to push cut and benders down on price by holding back orders but are now with their backs to the wall and have to place orders at much higher prices compared to their budgets. Most European cut and benders hold very toxic order books, with sales being approximately €200-300 per metric ton below replacement costs. EU mills could easily increase prices significantly as there is no available alternative for benders. Imports are not competitive, and quotas have been fully used up. Rebar prices compared to HRC prices are completely out of line.

Prices at record highs in US, domestic producers in control, credit an issue for customers

The North American market is also short of steel. In the US, demand is way up, but to ensure supply is far more difficult. The order books of all domestic mills are full, with order deliveries extending up to four to eight weeks. Imports are even harder to ship, as international mills are even busier. Besides, shipping is a big challenge, with more delays at double or triple the costs. Prices are at historic highs, making credit decisions even harder. Almost all customers have maxed out their credit limits with double the prices on most items. In short, the situation is most advantageous to domestic producers who are working at near full capacity, but traders have difficulty in supplying and/or financing the growing demand. Inflation in most commodities is around the corner. While both the US and the EU are short of steel and still have their protectionist measures in place, it seems that this situation will continue for a while yet.

Chinese production surges, its semis imports provide boost for global prices

China continues to roar ahead, now surpassing three million metric tons of liquid steel production per day. Despite the surge in Chinese steel production in the first and second quarters, China keeps importing semi-finished material, which has pushed up prices in the global market.  At the end of April, China announced the cancellation of the tax rebates on exports and, as a result, it most probably will not be exporting in the near future. This will open new opportunities for other market players like Turkey to increase their exports. Such recent decisions in China should result in pressure pushing prices up even more.

Iron ore prices rising, Asian market back to pre-Covid levels except for India

Iron ore prices are heading higher and the Asian market is fully back to pre-Covid levels, except for India whose steel output and scrap imports are expected to be negatively impacted.

Turkey remains an exception to the positive global longs demand situation

Demand for long steel products globally is good except in Turkey due to the high interest rates there. However, highest-ever prices are being experienced in the flat steel segment worldwide.

Demand increases even further in Latin America

Latin America is no exception in the global market. Supply is tightening and demand is increasing even further. Brazil is deciding to export less due to domestic demand. With further improvements in the vaccination process in Latin America, an increase is also expected in the demand scenario, which is already at a good level. Domestic sales continue to improve in the region, with higher volumes compared to the pre-pandemic period.

Lead times extended, entire supply chain is earning profits

Lead times are long in the market and the entire supply chain is earning profits. Disrupted supply chains and low stocks create pockets of demand in different areas of the world, which keep driving the market up. Stimulus programs also help increase demand. Although there has been news of more capacities coming back on stream, it seems the current situation will continue for the rest of the year.

Vaccinations and summer season to support return to normal, boosting demand

The global business environment is getting better with the increased distribution of vaccines, especially where they have been administered at rates exceeding 30 percent. Vaccinations and the summer season will help most countries resume a normal form of life, which in turn would support demand.

Credit insurance becomes an issue for buyers as prices continue to rise

Shipping is still the biggest challenge. Besides shipping, credit insurance is decreasing in volume as prices go higher. So far, steel mill customers have been able to find ways to circumvent this, but it remains an issue for the future. Another issue is that lead times are shrinking in the US market for ‘nice orders’. On the other hand, geopolitical winds may cause changes in the landscape.

Competition is healthy, outlook for next quarter is very good

Competition in the market is healthy but demand is sufficient for everyone. Accordingly, there is no concern about competition in general. The current status of the market is perfect to proceed with a very good outlook for the next quarter.

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