There have been no signs of improvement in the global long steel products market. On the contrary, the current business environment has, unfortunately, deteriorated rather than improved in terms of the supply and demand balance. The wars, particularly in Iran and Ukraine, have significantly exacerbated existing disruptions across global supply chains. What we have seen looks more like a supply-side shock than a demand recovery: higher energy, electricity and freight costs have pushed prices upward, and these increases have so far been widely accepted by customers as inevitable.

Many economies would enter recessionary territory if ceasefire in Iran war fails to hold

So much will depend on whether the ceasefire just announced in the Iran war will hold. If it does not hold and should energy prices remain elevated, there would a substantial risk that many economies will enter recessionary territory, with wide-ranging and potentially severe consequences. Transportation costs have already risen considerably, while uncertainty surrounding future demand has increased across all major markets. At the same time, there is a noticeable shift toward greater protectionism, further complicating international trade dynamics.

US scrap export volumes decline, UK shifts to containerized scrap exports to Turkey

US ferrous scrap export volumes are in decline due to more domestic consumption and difficult prices in Asian markets, while the UK is shifting to containerized exports to Turkey.

On the bright side, increased pre-ordering and restocking activity observed

Despite the prevailing challenges, there are some positive aspects in the global market. Heightened uncertainty is prompting contractors involved in confirmed construction projects to secure supply in advance, leading to increased pre-ordering in order to mitigate the risk of further cost escalations. Additionally, in an inflationary environment, apparent demand often exceeds actual demand, as businesses tend to build up inventories as a precautionary measure. This dynamic is likely to result in a degree of restocking activity, providing short-term support to market demand.

Three distinct regional dynamics seen in competition in global market

Three distinct regional market dynamics can be identified in terms of the level of competition in the global market, which remains high, though it varies across regions. Broadly speaking, in the United States, competition is largely domestic, with local producers competing primarily within the internal market. In the European Union, the landscape is more mixed, characterized by intense domestic competition alongside a limited presence of imports from third countries. In contrast, in the rest of the world, competition is significantly more intense, with global players actively competing across multiple markets.

Rising costs of energy exerting pressure across the industry

At the same time, rising energy costs – particularly impacting steel producers – along with increasing scrap prices driven by higher oil and transportation costs, have exerted additional pressure across the industry. These factors are contributing to heightened competition globally, as producers strive to maintain margins and market share in an increasingly challenging cost environment. The market has accepted cost-driven price increases up to a certain degree. The uncertainty is in the second-order consequences. As with any supply-side shock, the market may have to rebuild around new supply routes, new energy costs and changing raw material availability, and it is still too early to judge how the wider economy will react. It will be necessary to wait and see what impact the ceasefire in the Iran war – provided it holds – will have on easing the surges in costs and if it will bring about a badly-needed return to something approaching normality for business and trade.

Current market environment very unstable, dependent on US war-related policy decisions

The current market environment can be best described as highly unstable and deeply influenced by geopolitical developments. In particular, the global economy has been increasingly dependent on policy decisions made by the United States administration in relation to the war against Iran, though some hope is now offered by the implementation of the ceasefire. Recent developments have intensified market volatility, with rising energy prices, supply chain disruptions and inflationary pressures creating a highly uncertain outlook.  In this context, market conditions remain fragile and unpredictable, with future stability largely contingent on geopolitical outcomes and policy direction in the coming months.

Outlook for next quarter remains uncertain

The outlook for the next quarter remains uncertain, primarily due to the geopolitical tensions in the Middle East. Market direction will largely depend on how the situation evolves in the near term.

If the ceasefire holds…

Should the ceasefire hold, an improvement in demand can be expected, leading to a more positive outlook and gradual market stabilization. However, were the ceasefire to break down and war to be renewed, the risk of a significant economic slowdown will increase. In such a scenario, many economies could enter recessionary conditions, with potential project delays or cancellations and an overall challenging business environment. Other than the military-industrial complex, all other industrial sectors would be negatively affected.

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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 is slowing down in general, which is putting pressure on producers. Demand for reinforcing bars and wire rods remains very weak and there is strong pressure on prices from the new exporters – Algeria, Egypt, the UAE and Saudi Arabia – who are in the market with very aggressive offers.

Business still stagnant in US, high interest rates a major factor 

Business in the US is still stagnant. Demand has slowed down and supply is the same, putting pressure on prices. High interest rates constitute the biggest factor in the slowdown of both commercial and residential construction. The US Federal Reserve’s efforts to keep inflation under control are working, while slowing down the economy. Flat steel prices are still under pressure, with flats mainly supplied from domestic sources.

Non-traditional sources active in exports, Turkey struggles due to trade measures 

Exports are only active from non-traditional sources like Algeria and Egypt, which are subject to no antidumping or countervailing duty measures so far. Turkey has been unfairly hit with high antidumping duty, when one mill honored a contract made before the Ukrainian war and delivered as pledged, even after the surge in prices. All Turkish mills (except one) were conveniently painted with the same brush.

New US and EU measures target Russian exports of semis and raw materials 

It seems that the situation in Ukraine will be a never-ending story. However, the new restrictions to be introduced by the US and the EU will create more complications for producers who import Russian semis and raw materials and export their goods to the US and the EU, namely, Turkey and Egypt. The EU is already demanding a declaration from producers confirming no Russian input for goods that are shipped into the EU. US officials are paying visits to individual companies explaining the risks of not cutting ties with Russia. We will witness more circumvention cases in the coming period. The halting of Russian steel imports in six weeks’ time into the EU should have a significant impact. It is difficult to prevail in defensive cases, which may cause Turkey to strongly reduce imports from Russia.

US and EU to produce less steel in 2023 than in 2022 

Both the US and the EU will produce less steel in 2023 than in 2022.  In the US, flat product output is down five percent year to date, while domestic long product output is down even more.

Europe very quiet due to holidays, private sector investors lack confidence 

Europe has been very quiet over the last few weeks due to the holidays. Prices are very flat and there are no signs of improvement in sight. The main reason is low activity and low ordering from the market. Mills are fighting for every ton which is available. Overcapacities in the EU are preventing mills from raising prices. Imports are practically non-existent right now as one can see from the safeguard import statistics. All EU countries are trying to avoid a recession by injecting money into the economy, but the private sector is afraid due to all the uncertainties surrounding energy prices, interest rates and additional burdens which may come from Brussels in relation to CO2 emissions. All these uncertainties are holding the private sector back from investing.

Strong domestic construction in Russia restrains its exports 

Russia is experiencing strong growth in its domestic construction sector and so it is not so hungry for exports.

Stimulus packages in China have no impact on its exports 

So far, all stimulus packages introduced in China have had no impact on exports that affects global steel prices. China’s BOFs are working at over 90 percent capacity utilization and EAFs at under 50 percent.

Scrap demand falls amid reduced steel outputs, scrap prices hold firm 

Slowing production has also led to lower ferrous scrap demand. European demand is expected to contract in the coming quarter. Although demand is slowing down for scrap also, inflows are dropping for scrap traders. Availability is low and this is exerting pressure on recyclers to get material to their yards and shredders. Scrap prices are still holding firm, mainly because suppliers are much more organized. They may stay around the mid-$300s/mt unless demand for reinforcing bar falls further. India seems to have a weak domestic market, but, on the other hand, it is paying top bucks for scrap, which supports scrap at the mid-$300s/mt.

Some new projects in Europe, Turkey and S. Arabia to provide support 

There are a number of projects coming on stream in Europe and Turkey. There is also the NEOM city project in Saudi Arabia, with demand for a huge quantity of reinforcing bars which is supposed to come on stream shortly.

Freight costs lower but still higher than before pandemic, clean energy an issue for steel sector 

Raw material prices are softening a little and shipping prices are coming down but are still higher than pre-pandemic prices. New policies on carbon emission limitations and clean energy will be a problem for the steel industry in the future. Ironically, a lot of Chinese “clean” energy technology is made in factories using coal-powered electricity. Clean energy technology should come from clean supply chains, though cheap Chinese inputs such as polysilicon for solar panels and critical minerals for batteries are often made or extracted by cheap labor in other parts of the world.

US still a locomotive of the global economy 

The US economy and US industrial orders are still the locomotive of the global economy. Electricity prices have also lessened since last year’s fluctuations. Inflation no longer seems a threat and in general autumn is expected to be better than the first seven months of 2023.

International competition weak amid low prices and high logistics costs 

International competition in the market is weak because prices are so low that logistics are killing trade. There is almost no international competition. Otherwise, the competition is for volumes, not to increase them or simply to keep them stable, but rather to limit the slide in volumes as much as possible. Imports are dropping in North America and the EU, which of course affects the MENA region and Latin America.

Current market status unstable, outlook unsatisfactory except for scrap suppliers 

Under these circumstances, the current status of the market can be described as unstable and unpredictable. The outlook for the next quarter is mostly unstable and unsatisfactory, except for ferrous scrap suppliers.

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Demand in the global long steel products market is either very low or there is no demand at all, depending on the region. Overall demand is less than real supply and possible supply increases. The demand for ferrous materials has also slowed down considerably as industrial outlooks have lost visibility. Energy cost uncertainty and the destruction of demand have led to order cancellations. Demand is not expected to improve in the coming months and therefore operating under current conditions is not sustainable for the steel industry. More closures will follow in the coming months especially for those who also suffer from the consequences of the war in Ukraine.

Chinese traders start to short the market

Customers are delaying purchase decisions while Chinese traders are shorting the market. Steel mills are in trouble and even those in Asia are entering the red zone. Energy prices have been softening thanks to the warm weather but may go through the roof again at any moment.

Private sector construction activity in EU almost completely dried up

Private sector construction activity has almost dried up completely in the EU market, which places small and medium-size cut and benders in real difficulty. Industrial and public projects are still available in good volumes, but everyone is fighting for them now and undercutting prices to an extent we saw at the beginning of the pandemic when some market participants believed prices would fall through the floor.

EU mills doing everything to maintain prices at certain levels

However, domestic mills in the EU are doing everything to maintain prices at a certain level and, even if they have reduced sales prices a lot in the last couple of weeks, their clear aim is “profit before volume”. The uncertain situation for mills in relation to gas and electricity bills remains unpredictable, which makes it difficult to push prices down. However, more pressure is coming from imports. Demand for construction, on the whole, is still good in Europe. At least in Germany, demand is still good despite the pressure on prices. Those who have full order books are in a good situation and can sit and wait if they have covered their needs.

US market outlook becomes more unknown and negative, mills still see record profits

In line with the general international market, the US market has also changed to a more unknown and negative outlook. With the expectation of raw material prices coming down, there is an expectation that all pricing will undergo a correction. With this expectation and the approach of the end of the year, most service centers are reluctant to replenish their inventories. The steady rise of interest rates also increases the expectation for a slowdown in the economy and in future construction, especially housing and commercial construction. Although all pre-financed projects are keeping demand high, the future is more uncertain, especially after the mid-term elections in early November. Unemployment is still very low, making it difficult to find qualified workers both at warehouses and ports. Ports are still very congested, making cargo movements even more difficult. Protectionism is on the rise even with this administration, with so many roadblocks at every step to discourage imports. In spite of all such negative developments, the US mills are still turning in record profits, even though the July-September quarter showed less earnings.

International market under pressure from very aggressive prices from Asia

In general, market prices are under pressure from Far East and Southeast Asian mills who are being very aggressive. The GCC countries are also offering very low prices which makes it impossible for Turkish producers to compete in the long products market. Even the Turkish market has become a battlefield for some exporting countries like Russia, India and China for some other products. The coming holiday season will probably make things worse. Turkey has been squeezed between low-priced semi-finished steel products and a stronger India than normal. In China, iron ore prices have fallen to two-year lows amid renewed fears of more Covid lock-downs.

Freight rates become more predictable – a positive development  

Freight rates are becoming more predictable, which may be considered as more good news for the market. Logistic costs are slowly moving towards “normal” but are still at high levels. At least the availability of vessels, barges and trucks is better now.

India still shows strong appetite for raw materials

Moreover, lower ferrous scrap flows have mitigated demand cuts to some extent. India has also had a strong appetite for raw materials for some time and this is expected to also continue well into 2023.

Competition still very high, except for US and EU which remain protected

There are still different global markets from the point of view of competition. The US and the EU are protected and not part of the competition in the global market. Competition is very high elsewhere, particularly in the Middle Eastern and Far Eastern markets. China has been more and more aggressive lately and offers of semi-finished products out of the Gulf region are very competitive. Freight rates are the only factor limiting competition in faraway markets.

Current market situation and next quarter outlook both unstable and negative

Under such circumstances, the current situation in the global long products market may be described as unstable, while more negative news continues to come from Russia’s war in Ukraine. The outlook for the next quarter is also unstable and negative. The January-March period may be worse than the height of the pandemic, driven by lower prices in Asia and continuing impacts from the ongoing war in Ukraine.

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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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Supply is no longer an issue in the global long steel products market, and demand will be the driving factor from now on, though it will probably be rather slow for a while because prices are normalising and delivery periods are becoming shorter. That said, this situation should be temporary. The cost of producing steel is increasing, especially on the energy side.

Demand impacted, however, by approach of end of year

Demand in the main markets worldwide appears to be flat, being strongly influenced by the approach of the end of the year. Demand for long steel products is heavily dependent on China’s behavior, both domestically and internationally.

EU mills can no longer simply dictate prices as domestic buyers’ stocks increase

The EU deformed reinforcing bar market became somewhat quiet after the summer holidays, while some EU mills are finally looking for new orders after a long period of just distributing material. Mills in the EU are no longer able to just dictate prices as the stocks of European buyers have increasingly been filled and panic over shortages has vanished. Italian mills have already reduced their prices based on lower demand.

EU mills struggle to find competitively-price scrap, but still have significant breathing space

On the other hand, the EU mills are struggling to find sufficient volumes of quality scrap at competitive prices. Moreover, the logistics situation is getting worse in terms of constituting a bottleneck. Furthermore, the strong surge in electricity costs, which have tripled or quadrupled since August this year, has tightened the pressure on EU mills, meaning they have to seek to pass on product price increases of €50-100/mt to their customers. However, the mills in the EU still have a lot of space to breathe freely since imports are less of a threat due to factors including safeguard measures, the export taxes in Russia, the cancellation of export tax rebates in China, and also the current high freight rates.

Benders still busy in Europe backed by plenty of new projects

Some good news is that, while there has been some consolidation of demand and restocking has gone down to normal volumes, benders are still busy in Europe and there are plenty of new projects on the way thanks to the EU stimulus package.

Global GDP performance provides support for longs market

World GDP is expected to grow in 2021 in comparison to 2020, showing good domestic performances in the main economies. Prices have been finding different sources of support even despite the volatility of demand. It seems like the peak has been reached as far as production is concerned. China’s decision to keep maximum production at last year’s level due to energy shortages will set the floor for prices at the current levels.

High freight rates limit intensity of competition globally

The intensity of competition in the global market currently depends heavily on freight rates. Due to high freight rates and trade measures, competition is becoming rather domestic. That said, given the uncertainties and the slow demand in the market, some suppliers such as the mills in the EU mills intend to dump their extra quantities somewhere else instead of offering to their domestic market.

Energy prices and China are crucial factors for the coming period

Asia and Europe are currently going through a severe energy crunch with all-time high prices for coal and natural gas. China seems to need to cover domestic outages by means of imports, and this has strengthened markets elsewhere. At the moment the markets are playing catch up. Scrap and steel bookings which were postponed are now quickly covered, and some nervousness over sufficient availability has crept in.

Margins will shrink, much will depend on China

Ferrous scrap, iron ore and coal prices will increase. Margins will shrink and, with energy prices too high, some mills will implement shutdowns. All of this will have less impact IF China starts to buy pig iron, hot briquetted iron and semi finished products.

Market situation stable, with far more positive outlook for next quarter

Under these circumstances, the market can still be described as stable even though there are some fluctuations. The outlook for the market in the next quarter is much more positive than we have seen for some time.

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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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There is still a shortage of steel everywhere in the global long steel products market. Demand remains high in the sheltered markets. On the other hand, there is pressure from the Chinese government to reduce steel prices. It is hard to imagine that this will lead to anything but more supply shortages.

If we look back at the previous price booms in the global market, circumstances were different. There were almost no volumes for traders to trade in 1987 as everything had been sold. In 2008, prices hit the highest levels ever, but the correlations between the different products made production-cost sense. The volumes were there and available, while buyers just paid the price. Today, volumes are in short supply and consumers pay the requested prices. While obviously we are in new territory, it may be noted that the 2008 boom ended with strongly falling prices. Last month, steel production was up by 23 percent. This trend will continue and, as a result, there may be some price correction in the last quarter of the current year.

Buyers in EU have their hands tied, have no option but to accept new higher prices

Reinforcing bar prices in the EU market have reached a 13-year high and the demand there is still strong. Prices of deformed bars are not bound to scrap prices anymore. Some mills have long lead times and those who have material in stock are focusing more on prompt deliveries of smaller volumes, which increases the pressure on the buying side. Due to the lack of import options, buyers have no option but to swallow the new prices in order to fulfil their commitments to their customers in the construction industry. The impact of the EU safeguard measures on steel imports can be seen very clearly taking into consideration that 30 percent of the deformed bars consumed in Germany and the Benelux countries had been imported before the safeguard measures were introduced, whereas the share of imported steel is now down to only about five percent.

Strong demand and scarce supply still prevails in US market

Demand in the US is strong in spite of the high prices in the market. At present, the problem is on the supply side. Most mills are sold for one to two months forward and have less availability of any prompt shipments. Naturally, prices are as high as ever and look like continuing in this way throughout the third quarter. Some mills are adding additional capacities and labour shifts, and so the supply side is expected to be in check in the fourth quarter. However, prices may continue at such levels throughout 2021. Imports are difficult as most buyers do not wish to commit at these historically high prices for three to six months forward. Shipping prices are also as high as before, with much more uncertainty regarding arrival or delivery dates. With all this, domestic mills have a considerable advantage over import sales.

China’s almost complete absence from exports is a big plus for the global market

During the last two weeks of May, many thought that China would have lower prices. However, the prices of Chinese steel are going up again along with iron ore prices. After China removed steel export rebates in the last quarter, its’ reduced capacity for export has become a big plus globally. The world market will be in better equilibrium as China is almost completely out of the export market now. In this situation, any downward trend such as expected by some in the fourth quarter will certainly be much softer. The mills that have no alternative to the Chinese market will have to reduce their prices. There have been some cheap sales from Iran and India. The other countries will weather this short storm. Otherwise, there is not much competition in the market but rather more struggling for availability depending on the product.

Scrap demand continues to increase, expected to remain strong

In the meantime, demand for ferrous scrap continues to increase as steel production strengthens. Supply chains remain extremely tight in many geographies as inventories are low and finished product demand remains high. Well-booked steel mills at high prices will also mean strong demand for raw materials through the next quarter. Another major positive for the market is that global raw material prices have seemed to be levelling off at the recent high prices, which brings some stability for future sales. The attempt by China to push raw material prices down has not succeeded.

Freight rates elevated, another increase may be imminent

Freight rates are elevated as a result of the general demand conditions in the global economy. Container ports are becoming more congested and so another increase in freight rates is imminent.

Hopes increase for more normal conditions in post-Covid period

Steel demand in general remains elevated and we are quickly entering a post-Covid period of open societies, travel, and a return to more normal consumption patterns. Limitations on daily life will hopefully be over by the end of the summer, which will be the main factor supporting demand.

Very positive outlook for US and EU amid vaccinations and public spending

Overall demand is strong due to public spending. Vaccinations have been carried out very rapidly before the summer in the US and the EU and so these regions are returning to their pre-Covid days slowly. New infrastructure and construction projects are being approved in Europe and the US. Regional and domestic demand in Europe and the US are stronger than normal. The Russian market also remains very strong.

Market outlook is satisfactory if not outstanding

The current status of the market can be described as generally stable with some short-term fluctuations possible. The outlook is certainly satisfactory if it cannot be described as outstanding. Going forward, competition will probably only be seen in Asia with some see-saw fluctuations, but it seems the overall market will remain “perfect to proceed”.

Cheap money policy and infrastructure spending in US to give market a boost

Although the four percent inflation increase in the US has created some concerns, the current cheap money policy is expected to continue. It does not seem that infrastructure spending will be delayed this time around. Interest costs for the government and private sectors are at a record low and infrastructure spending is more necessary after another 13 years of neglect. This should support construction-related consumption and pricing. With the arrival of extra demand after we return outdoors, the market should still enjoy good business even next year.

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Lead times are longer than ever in the global long steel products market and there is still strong demand, encouraging mills to continue increasing their prices. The situation has certainly become better from the producers’ point of view. They are all making money and their lead times are elongated.

Shortages of material keeps prices and margins high

It was somewhat surprising to see that the steel output outside China had not increased during the first two months of the year compared to the same period last year, despite the increases reported in India, South Korea, Turkey and Brazil. Outputs in the US, Japan, Russia, Germany, Taiwan and France were all lower year on year. That means there is still a shortage of material, which keeps prices and margins high. Meanwhile, output in China increased by 13 percent year on year, though it seems China will continue consuming at similar rates compared to last year.

Strong demand also supports price rises across the world

There are still shortages for many products in the global market, which are exacerbated by the disruptions in logistical and shipping chains. Customers are buying less than what they need, but these local shortages keep pushing the markets up. Prices keep on climbing in most areas across the world as demand is strong.

EU longs mills enjoy good order books, price increases to gain momentum

The long steel products market in the EU is very stable and EU mills are enjoying good order books. The reduced number of offers and stronger seasonal demand will speed up price increases. The hand-to-mouth buying mood of EU clients is good for local mills as they can adjust their prices instantly depending on the cost and sales situation. The termination of safeguard measures in the EU on July 1 – if it were to happen – would most probably not create a flood of imports under the current circumstances.

US mills enjoy high margins and high capacity utilizations, importers still struggle

On the other hand, US domestic mills are enjoying very high margins with high capacity utilizations and the ability to take any business from imports at will. The situation has become even worse for importers in the US. Most supplying mills are booked full. The availability of products is three to four months for flat rolled products and a minimum of two months for long steel products. In addition, the availability of vessels is even worse, making shipping more difficult. Prices for all commodities are high and now shipping costs are hitting an all-time high. With all these factors, importers are finding it even more difficult to make projections for future business. It is not clear how long all this will last.

China keeps importing, its billet buying gives global market additional strength

China seems to be happy with its situation and is not interested in increasing exports, but instead keeps importing. Their new five-year plan promises considerable public spending on many projects. China’s buying of billets gives the global market additional strength.

Hopes rise amid vaccinations, stimuli, US infrastructure bill and low Chinese exports

Although we are in the third wave of the pandemic, vaccinations are boosting hopes and the positive mood is helping demand to stay strong. There is an expectation that post-pandemic government stimulus programs will be hitting consumer products and construction markets soon. In addition, the expected US infrastructure bill and China’s timid export behaviour are the main positives for the second and third quarters of the year. It seems the current prices will hold for the next three months and that reductions will be gradual rather than sudden.

Competition mainly seen among buyers, not suppliers

Tight availability from most exporting countries and companies is affecting the level of competition in most markets. On a regional level, competition is very limited due to long lead times, but it is still healthy. From a global perspective, there is very little competition as transportation costs are skyrocketing. The only competition that exists today is the competition among buyers.

Market is generally stable, outlook is very good and satisfactory

Even though there may be some fluctuations, the current status of the market is generally stable. Most market players have convinced themselves that Covid-19 is now in the past tense. Whether we are in for lots of unpleasant surprises is unknown. The second quarter should be better than the first quarter. Accordingly, the outlook of the market is very good and satisfactory.

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