According to the statement, the US continues to face unfair competition from China’s overcapacity in steel, which is among the world’s most carbon-intensive, while China’s policies and subsidies for their domestic steel industry mean high-quality, low-emissions US products are undercut by low-priced Chinese products produced with higher emissions.

Next week, the US Trade Representative will issue a Federal Register notice announcing procedures for interested persons to comment on the proposed modifications.

The tariff-rate quota volume specified in the 2021 agreement between the United States and the EU, totaling 3.3 million mt, remains consistent with the objective of reaching and maintaining a sufficient capacity utilization rate in the US domestic steel industry, Biden said.

The current situation and sentiments are generally very good in the global long steel products market. Order books are mostly filled to above average levels. The holiday season is over, winter in the northern hemisphere is coming to an end and vaccinations are progressing. These factors as well as stimulus activities, a will to return to normal, and strong investments are all strong positives for the global long steel products market. With production increasing in many parts of the world at once, commodities, raw materials and steel will continue to be in high demand during the spring.

Producers eager to raise outputs amid strong price trends

Everyone in the market is working to make more steel to take advantage of the current situation. Iron ore-based producers are starting up blast furnaces, which will come on stream over the longer term. Steelmaking raw materials and commodities like oil are trading on strong price trends. There are historic metal margins for flat products, and difficult margins for most long product markets.

Tight supply and reopening of economies drive inflationary pressure

Very tight supply chains in general and the continued path towards the reopening of economies are driving inflationary pressure on everything from commodities to freights. Winter conditions in Europe and the US in February were logistically troubling. Semiconductor shortages slowed down automotive production, with limited scrap availability as a result.

EU steel prices close to 2008 peak, but EUROFER still seeks safeguard extension

Imports have dropped to historically low numbers in the EU because of the prevailing safeguard measures. As a consequence, the downstream industry is facing trouble in finding the grades and volumes they need. Steel prices in the EU market are almost as high as at the peak in 2008 and international prices are even higher or equal to EU domestic prices. Moreover, China – the preferred enemy of EUROFER – is not really interested in exports anymore but is seeking to cut back steel output. China may also cut back the tax rebates on exports, which would certainly have a further negative impact on export volumes from China. Under these circumstances, there does not seem to be any threat of imports for the EU domestic market. Nevertheless, EUROFER is still pushing for an extension of the EU safeguard measures.

Importers under pressure in US market

The current situation seems only to be worsening from the importers’ point of view in the US market. In addition to supply shortages, importers are now dealing with shipping difficulties, especially as regards obtaining containers and serious local port congestions. Both material and shipping prices are at historic highs, recalling 2008. Most domestic mills are fully booked through May and June, thus making future sales even more difficult. It is now clear that the Biden Administration will not immediately change the trade restrictions imposed by former president Trump. Overall, difficult times continue for the importers.

China to step up focus on EAF-based output, raising pressure on scrap prices

China has already returned from its New Year holiday in a positive mood that has helped demand to resume and prices to pick up. This will also be supported by warmer weather conditions. China is starting to reduce steel output to fulfil environmental targets and aims to reduce pollution by 40 percent by the end of 2021. Accordingly, BOF plants will reduce capacity utilization, while EAF plants will take over this share of production. A likely consequence of this will be to increase pressure on ferrous scrap prices.

Competition relatively good in global longs market

Competition in the global long steel market is in a relatively good condition. The only exception is the import market in the US where competition is still high. Elsewhere, the principal exporters are still exporting, while the principal importers are again importing. Asia looks like becoming more competitive in billets and reinforcing bars. Producers are mostly relaxed these days, though in the coming months the effect of all those blast furnaces being refired within the past month or so will start to be felt in the market.

EU domestic mills in a strong position

There is not much competition in the EU right now. The mills in the EU are aware that a lot of material still has to be bought shortly as stocks at many benders are empty. As quotas are tight and rumours of an extension of safeguard measures already exist, domestic mills can sit back and wait until buyers are obliged to make a move. In the meantime, the mills have to watch out for opportunistic exporters from other regions.

Ex-EU scrap supply reduced amid strong intra-European demand

Exports of ferrous scrap from Europe are slower due to intra-European demand being strong. European political activity and industry protectionist efforts to limit scrap exports from Europe are troubling and pose a risk for free trade going forward should they succeed, even if partly.

Outlook for next quarter much better compared to last year

The outlook for the next quarter is much better compared to last year, and is very good for most of the market. The market can generally be described as all set to prosper, with the exception of the import market in the US which still is unstable.

How permanent will demand be and how quickly can supply be adjusted?

European construction activities almost proceeded at 100 percent levels amid the mild winter conditions. The market has the potential to be very strong in the second quarter. There is sufficient demand for long products worldwide despite the pandemic. The relevant questions now are; how permanent will demand be and can supply to the market be adjusted quickly enough when demand decreases? The outlook for the US market may still be considered to be an exception. Two big infrastructure projects, one in California and one in New York were taken out from the US$ 1.9 trillion stimulus and the increase in infrastructure spending has been delayed.

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Despite some very good margins for December, the global long steel products market is facing more concerns for February and March. China did increase its presence in the export markets and did enter at prices comparable to other sources, but ended up lowering its prices quite quickly. In the current global market circumstances, sentiment is better and so a return to the prices of September and October last year hardly seems foreseeable.

Scrap market fluctuations create uncertainty for production costs and margins

The unexpected hype in prices of scrap and subsequently steel since December gave the impression that we may see a super cycle in 2021. After very strong demand at the end of 2020, January saw a more sensitive market. Prices had moved up too rapidly in anticipation of a quick recovery with restocking activities. The sudden heavy drop in the scrap prices made market players nervous. It was thought back in November that domestic scrap prices in China would reach international prices, but instead international prices have reached the levels of Chinese scrap prices seen in November. Cost of production seems to be the last thing on the minds of those who are the market decision-makers on sales prices. Not even the Chinese have this issue figured out as they have a rebounding economy and worse margins now than back in November last year.

US mills benefit from cheaper local scrap and their more rapid local deliveries

The rise of scrap prices to historic highs and their subsequent softening has been the biggest problem in the US market as well. All customers are now naturally on hold and waiting for prices to come down before they place future orders. Ironically, future orders can only arrive in four to five months’ time as most mills are fully committed until April. It is extremely difficult to sell for such future dates when prices are coming down and the bottom is not clear. This only benefits US domestic mills who buy cheaper local scrap and can deliver faster than imports.

Section 232 unlikely to be quickly eliminated, but new US administration is a positive

The hopes that Section 232 would be swiftly eliminated by the Biden administration are rapidly evaporating as it has just proved that it favours this hidden tax ride by reversing the cancellation of the Section 232 duty on aluminium for Dubai. It could have used this opportunity to end all the Section 232 duties. The new administration in the US may stick to Section 232 for a while, but in the medium term things will probably be better with it at the helm. At the very least, they do not talk nonsense and do not tweet nonsense. Moreover, there is still hope that trade barriers will be torn down for good allies and that problems will be discussed on an eye-to-eye level and with common sense.

Vaccinations give hope for return to normality

The progress of vaccinations is certainly a positive for the market, but of course there is still a huge part of the community worldwide waiting their turn, though those in the community who face the highest risks are getting the vaccine. We may hope that by the summer the burden of the pandemic on our lives will be diminishing and we will hopefully start resuming our normal lives.

Mild winter gives Europe a boost, return to normality could provide further support

The very mild winter in Europe gives hope that construction activities will not be interrupted in 2021, while demand is still very good. If people are back to work in a more normal world, consumption will increase greatly and governments will spend the money from the EU’s Covid fund.

2021 likely to be a year of rebound, increases in output may bring risks

2021 looks very likely to be a year of rebound, a year of multilateral boosts to the global resurrection, with less political uncertainty. It is highly likely that demand will be good this year. However, we will not be seeing the same spread during the rest of the year that we are currently observing in this first quarter, since we have been reading that furnaces are being fired up one after the other.

All eyes on China for post-holiday period

Also as regards the prospects for 2021, China will be a significant factor. It has been producing more and may export more, and so future price hikes may be moderate compared to December 2020. To date, what has been offered by Chinese exporters has been somewhat confusing and has made people worried. Nevertheless, we will probably have to wait until China returns from its holiday to see where exactly the market will be heading. We are hoping for the Chinese to come back from their holiday to lower production. Otherwise, the price increase for raw materials will be maintained and the level of competition in the global market will be higher.

Scrap prices likely to stabilize in February, renewed buying anticipated

Scrap prices may have risen too rapidly to levels which they should not have reached, on the back of speculative activity and a correction was certainly expected. That said, the scrap market is still expected to be tight and demand remains elevated with strong steel production and stretched-out order books. Nowadays, scrap prices are descending to levels to which they should not drop because of supply pressure created by some hidden cargoes offered on prompt basis. However, we will likely see a stabilization in February with renewed buying from multiple market areas.

Competition now more regional

Currently, the activity in the global markets is rather slow, except for scrap deals, and competition is not so strong but is increasing slowly. Competition in the longs market nowadays is more regional.

Will EUROFER achieve extension of safeguard measures?

Safeguard measures make imports very difficult in Europe. It still has to be seen whether EUROFER will find another plausible argument to convince the EU to extend the measures beyond June 2021. EUROFER can be very creative when it comes to bending the statistics and facts for the good of its members.

Market generally unstable but outlook seems quite satisfactory

Under such circumstances, the current status of the market can be described as generally unstable with some fluctuations, but the outlook is quite satisfactory even though we will have greater clarity by late February.

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The global long steel products market is gradually scrabbling back towards normalization. As effective vaccines are being rolled out, the markets are realizing that we are returning to normal. Business is flourishing. Supply chains are currently restocking and orders are solid, while production levels are not keeping up.

Much better situation prevails now in terms of market prices

The situation is much better in terms of market prices as corrections in prices have already been seen, and price increases may be seen from now on. Low levels of inventory and increases in raw material prices are supporting the rises in finished product prices. As long as China’s net exports stay under 20 million metric tons per year, market conditions will remain good. If we can get over the pandemic by the middle of next year, we may see a similar situation as was seen in the first half of 2008.

Frenzied restocking in the US, no availability of prompt steel

In North America, the market trend started with the sharp reduction of steel imports into the US in August and then kept going. Restocking became somewhat frenzied: customers accepted the first price increases, and then were forced to accept increases thereafter. Expensive steel now is perceived as a safer bet than expensive steel in March. There is no availability of prompt steel at present.

Market in US worsens for traders

However, the market in the US has worsened from the traders’ point of view. The short-term demand increase was more based on restocking. Buyers’ desire to purchase ahead of additional price increases added to further buying. Raw material prices rose higher every week. Import prices followed immediately, whereas the US domestic price increases occurred with a delay of two to four weeks, which made imports very hard to sell. Allocations were also being filled very rapidly. Today, to have three to four months’ allocation for long products is not comforting. The possible price drop from recent highs is a deterrent from making long-term commitments for imports.

Imports become more attractive to European buyers

International prices are becoming a little more attractive to European buyers, following the upward trend in the EU market. But the uncertainty regarding safeguard quotas makes it still difficult for traders to collect orders. The euro-US dollar exchange rate is another positive factor which makes imports more attractive.

New US administration brings hope for greater sustainability

Having a new administration in the US is a positive, as it brings hope for more sustainability and for new debates instead of battles and threats among the big industrial nations. However, significantly, the US Senate election in Georgia in January will determine whether the Biden Administration will be able to make future decisions unilaterally.

Winter weather slow to arrive in northern hemisphere

The weather is still relatively warm in the northern hemisphere, with no winter in sight. A lot of stimulus measures and vaccines will help put the world back on track, while China continues to play a huge role, with a lot of energy. China is still performing well, with no signs of a slowdown. The US and EU have joined China as far as demand is concerned.

Vaccines bring hope for return to more normal life

Vaccines appear to be coming on stream in December and January and so there is finally light at the end of the tunnel for a return in 2021 to a more normal life. That said, the news regarding vaccines has been overshadowed by the rapid rise in steel prices. These can only give way to price corrections in the future, thus making today’s purchase decisions even harder to make.

Market situation stable with sole exception of US

The levels of competition in the market are still high, while the overall market situation can be described as stable and in perfect condition to proceed, with the sole exception of the US market which is unstable at the current time.

Very good outlook for next quarter, excepting US

China is quietly increasing its exports and reducing its imports. The current price levels will be sustained if not increased further in the first quarter. Sentiments regarding added risks and stimulus measures are putting pressure on the US dollar. The markets in the US will not be stable. The outlook for the next quarter is very good, with the sole exception of the US.

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The global long steel products market is becoming even more regionalized. All the safeguard measures, tariffs and antidumping and countervailing cases are reducing the global exchange of products more and more. The Covid-19 pandemic gives producers in certain markets the pretext to lobby their governments with even more arguments to get their domestic markets protected for no reason, but politicians just go along and accept this constant pressure as the public is not really focused on such ‘minor’ issues nowadays.

China’s imports start to slacken, it could eventually revert to being a net exporter

China has lately been reducing its purchases of pig iron, HBI, slabs and billets. However, no major change is expected in China at least until after the Chinese New Year holidays. That said, the margins in the Chinese domestic markets have been reduced and expectations are that China will shift from being a net importer to being a net exporter during the next four months.

Possible lifting of China’s scrap import ban could strongly impact global scrap prices

There are also reports that Beijing will allow the import of ferrous scrap with fewer restrictions. The last time China was a significant player in the global ferrous scrap market, it purchased about 14 million metric tons in a single year. Of course, China is a much larger producer, with more EAF-based production now. In the event of China lifting its scrap import prohibition, global scrap prices could increase significantly in view of the large EAF-based capacity the country has recently built up.

2021 will hopefully be a recovery year

On the other hand, next year will be a recovery year globally after all what we have been through in 2020.Accordingly, demand is expected to be relatively good. Of course, the EU and US producers are enjoying full protection, while, as far as Russia, Ukraine, Turkey, Iran and Brazil are concerned, all depends on China.

Some negative signs in the US

In the US, the market situation is worse. Demand is relatively unchanged, though it has been coming under new pressure from Covid-19. On the other hand, the US mills are constantly adding capacity which is not fully utilized, and so supply is increasing. Imports have thin margins, if any.  Domestic scrap prices have moved up again, for no solid reason, which means they will probably be forced down again this winter. Now that Biden is elected as President, there is hope for eventual withdrawal of Section 232 safeguard measures.

Post-Brexit quota reductions announced by EU

The post-Brexit quota reductions have been announced by the EU, and the ‘global’ and ‘international’ volumes seem to have decreased slightly.

Prices in US and EU improve, many countries able to compete with Chinese in Asia

Prices in the EU and US markets have been improving. Despite the recent slowdown, China is still a net importer and does not pose a real threat to exporters in the rest of the world. Even better news is that exporters in countries like Russia, South Korea, Vietnam, India, Brazil and Turkey can compete with the Chinese exporters in Asian markets. However, there is a strong caveat: China has increased its production to over 1 billion. As a result, the world market will be under pressure when its GDP slows down over the winter months.

Competition levels decline worldwide, except in US

The level of competition in the global market is getting lower and lower due to more and more market protections, and competition can be described as relatively slack with the exception of the US market where it is still high.

Global market situation and outlook stable, except for US

The current status of the market can be described as stable, yet again with the exception of the US market which seems to be unstable. The outlook for the next quarter is mostly satisfactory, except for the US market at present.

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