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.

At the opening of the conference, Murat Cebecioglu, chairman of IREPAS, emphasized that demand in the global long steel products market continues to lag behind supply. He added that the situation was getting worse because of China’s aggressive export policy and that Chinese exporters would continue to be aggressive, which of course would drive other Asian exporters to be aggressive also.

The IREPAS chairman said the situation in the global long steel products market is deteriorating, adding that there is huge uncertainty on what the next couple of quarters will bring for the global long products market, where it seems the situation will be extremely difficult.

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: General market mood hopeful for improvement

Jens Björkman, the chairman of the raw material suppliers committee, summarized the committee meeting findings regarding the general situation in the global steel and raw material markets, noting that the markets have been struggling this year compared to the past few years amid the worsening of economies due to high inflation and interest rates. However, he stated that the general mood is hopeful for a return to something slightly more forward-looking and optimistic.

Regarding Western countries, he stated that high interest rates and inflation have been putting pressure on scrap generation in the US and the EU, and added that the interest rates in the EU are expected to be cut during the spring. With the anticipated increase in scrap demand due to electric arc furnace investments especially in the US, Canada and Europe, Mr. Björkman noted that scrap flows will change significantly in the next 10 years, regionalizing scrap generation where scrap demand is high. In addition, he stated that steel producers have started to look for alternatives to scrap like pig iron, HBI and DRI to cover their needs for raw material. Indicating that scrap generation in Europe is down by 15-50 percent depending on the part of the region, Björkman said that, with the Carbon Border Adjustment Mechanism (CBAM), European scrap suppliers will try to keep scrap volumes within the regional market, reducing scrap exports from the region especially to Turkey, which operates mostly with electric arc furnaces and has significant demand for scrap.

Looking at China, noting that the country’s economy was expected to rebound after the Chinese New Year holiday but that these expectations did not materialize, he stated that China’s economy is going through a period of normalization. Meanwhile, pointing out that before the recent rebound iron ore prices had fallen to $100/mt CFR in the first quarter this year from the higher-than-expected level last year of $120/mt CFR, he said that the factors contributing to the price drop included high iron ore inventories at Chinese ports, slow demand and lower steel production. He concluded by saying that the market in China is adjusting to the lack of recovery of demand after the Chinese New Year holiday, adding that he expects iron ore prices to remain at quite high levels.

Traders at IREPAS: Global demand to be supplied locally, market conditions lead to regionalization

F. D. Baysal, the chairman of the traders committee, stated that there is demand globally but that it will be supplied locally, adding that ongoing trade tensions, global conflicts and political instability have changed trade routes, resulting in regionalization.

Looking at the other factors that lead to regionalization, Mr. Baysal expressed the view that the EU’s safeguard measures will be extended for another two years and that its quota volume adjustment will be minimal if any. Regarding the EU’s Carbon Border Adjustment Mechanism, he stated that it will put pressure on other countries, especially on blast furnace-based producers.

Remarking that Turkey’s export markets have been limited due to the US safeguard measures, the EU quota restrictions and the geopolitical tensions in the Middle East, the chairman of the traders committee stated that there are still some export opportunities for the country, including Syria, Iraq, eastern Europe, Africa and possibly Yemen. In addition, noting that the shipping crisis in the Red Sea has affected freight rates and container shipments a lot more than bulk shipments, shipments had to be shifted from containers to bulk, leading to additional costs.

Looking at China, Baysal said that the low steel demand in the country amid cancelled infrastructure projects has resulted in an increase in the country’s exports, with China dominating the global market with its lower prices and higher quality of steel, leading the strong competition. He also cited the Chinese Metallurgical Industry Institute’s prediction for a 1.7 percent drop in China’s steel demand in 2024, after a 3.3 percent decline in 2023, while further noting that China’s steel export volume increased by 14 percent year on year in the first quarter, though the value of its steel exports during this period was down by 20 percent year on year.

Producers at IREPAS: Low demand and Chinese exports weigh heavily on global steel market

Murat Cebecioğlu, chairman of IREPAS and also chairman of the producers committee, shared with participants the conclusions reached by producers regarding the current situation in the markets. He said that the GCC region is more optimistic in terms of business given the big infrastructure projects in the pipeline there, while market conditions in Egypt are getting better and better as the country’s currency issue has mostly been resolved, though the Suez Canal crisis remains a challenge. In some EU markets, the economy is picking up and inflation seems to be under control, while in others demand still remains quite low.

Commenting on the situation in China, the hot topic at the conference, Mr. Cebecioğlu said that Chinese exports will definitely affect the global market negatively and will reach high levels as they did back in 2015. However, this time the number of export markets is limited because of protectionism and Chinese exports will be more problematic in terms of competition. He went on to say that, apart from China, Malaysia, Indonesia and Vietnam are also exporting heavily and competing with each other. This will affect other suppliers and, as one of the biggest long steel exporters, Turkey is already feeling the effects, the chairman of the producers committee noted. Chinese exports are also taking a toll on the EU market, which is also struggling with very low demand especially in the northern part of the region.

Other exporters to the EU have to deal with quota measures as well as the Chinese competition. Cebecioğlu said the EU will most probably extend its quotas for another two years and, with new suppliers such as the GCC and North Africa, things will be tough this year before picking up and getting better next year.

Responding to a question regarding how Turkish mills managed to increase production in the first quarter of the current year, the committee chairman said that, in terms of sales, the first quarter this year was much better than the corresponding period last year. Turkish mills were able to sell considerable amounts to the EU and, with the quotas opening up, they had a window for exports. Commenting on the reconstruction works in Turkey’s southern region which was devastated by earthquakes last year, Cebecioğlu stated, “Construction activity has already started in the region, and it is mainly the mills in the region that are benefitting from all this. Since export activity is very low, this gives these mills a little bit of a break, and also funding should not be a problem as these projects are being financed by the government.”

The global long steel products market has entered a new and completely unprecedented situation as a result of the war in Ukraine. The current situation means one of the largest suppliers of many raw and semi-processed materials will be completely excluded from the market for an unforeseeable period of time, with the consequences being almost impossible to predict at the moment.

Supplies of raw materials and semis from northern Black Sea at standstill

There will certainly be difficulties which, in fact, have started already, with the supplies of raw material and semis from the northern shores of the Black Sea. The situation will definitely push prices up due to the reduction in shipments in general out of Russia and Ukraine, and the depth of the impact will be shaped by the extent of the measures against Russia and the duration of the conflict. We may see further shortages in energy supplies, which will increase costs further. The price increases for all steel products and the supply shortages will be greater and more serious than many people expected. There will be a long-term disruption of trade and shipments.

Will the steel industry have enough raw materials for April? No firm prices for anything

The steel industry does not know if it has enough raw materials to operate in April, nor does it know what the price will be for those raw materials that are available for purchase.  The steel industry is not quoting firm prices for anything, and any price mentioned would have been inconceivable before the last week of February. A significant part of commercial billet and slab has suddenly been put out of the global business. The CIS is a major part of this trade along with pig iron and iron ore pellets. We are currently going through a massive remapping of logic. Materials need to be covered from other sources in an already limited market. Conditions are extremely tight, which also shows in short-term pricing spikes.

Russian exporters hit by sanctions

Russian exporters have hit a brick wall in the Black Sea. There will be enormous problems with shipments whether westwards or southwards, as well as financial and logistical difficulties. Companies from the countries that have joined the sanctions will be making sure that their supply chains are not using material from the sanctioned countries. Ships that load cargoes at Russian ports will be subject to sanctions themselves: they may lose insurance and their cargoes will not be insured. Many customers will not take the risk of buying products of Russian origin.

Far East ports and China to remain best option for Russia’s exports

On the other hand, Russian mills are expected to maintain production but flows of steel will be from their Far East ports and by rail delivery to China.  Russian mills have the absolute lowest cost of production and by far the lowest marginal cost of producing one ton of steel. So, if they can ship and get paid, they will flood the Asian markets including the Indian subcontinent with increased quantities. This will affect the flows of everyone else in Asia and may not be welcome by the Chinese steel industry. China is the most stable steel market in the world today and it does not want instability.

China set to become dominant billet supplier to North Africa

China will probably become the dominant supplier of billets to North African markets, in competition with Turkish suppliers. The overall situation is bleak. The world is now very short of BF and DR pellets. The shortages of pig iron and HBI already existed.  For many users of such raw materials, Ukraine and Russia were the No. 1 or No. 2 supplier.

Scrap market in chaos, exporters delay new sales to compensate for previous losses

Scrap exporters sold at least 1.3 million metric tons of scrap to Turkey for March shipment and most of this tonnage is yet to be collected. After the Russian invasion of Ukraine, all markets are upside down and the cost of scrap in all regions is going up. At present, the demand is for April cargoes and sellers are busy trying to complete their old-priced tonnages for March. When the scrap market moves up further, the cost of collection also rises further, increasing losses for March, but this seems unavoidable. Accordingly, exporters are trying to delay their new sales for April as much as possible in order to compensate for the mentioned losses, making the current market situation even worse.

Price in US may have hit bottom

In the US market, prices had been softening until recently and have maybe hit bottom now. demand is strong, but domestic mills seem to satisfy most of the demand. Most international mills have stopped giving offers, so no new offers are available anyway. The holiday season is almost over. The only remaining holiday is Ramadan. Furthermore, we are almost at the end of the pandemic, unless another variant surprises us. Prices will go up in some places and prices could at the same time go down in others. Anyone who is not afraid of sanctions will be able to enjoy very cheap Russian and Belorussian origin raw materials and steel.

Not much competition in global longs market, severe competition for scrap

There is not much competition in the market. Prices will explode due to logistical problems and competition will be more and more regional. On the other hand, there is already severe competition among scrap importing countries to obtain scrap, and this is expected to continue. Winter conditions will be over by April, so scrap flows will be normalised. However, the loss of volumes from Russia and Ukraine will have to be compensated for somehow.

Market is currently unstable, outlook is extremely unpredictable

The current status of the market can be described as fluctuating and unstable. The outlook is also extremely unpredictable. Regardless of whether the steel industry does quite well, major questions will exist around increased inflation and possibly lower growth, perhaps stagflation.

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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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There is still no clarity and no sign of economic recovery around the globe. Nevertheless, European and US production cuts at blast furnaces for extended periods have given much needed relief to the rest of the steel industry. The global long steel products market is picking up due to the production cuts, as anticipated. However, there may not be a considerable improvement in terms of the profit margins of steel producers. Current sales prices in Europe, the Middle East, North America and South America still provide inadequate margins for producers. Today, the main problem for steel producers is demand as customers are reluctant to increase their inventories due to lack of confidence in overall sentiment. The current state of the worldwide economy makes clients extremely cautious as regards every procurement or any larger restocking.

Regionalization continues, international playing field gets smaller

On the other hand, the global market is smaller than it used to be because of protectionist measures. As regionalization continues, the playing field is getting smaller for some suppliers who have been hit by high dumping margins. As such, there is no balance between supply and demand and therefore prices in the international markets are still poor.

Unhealthy situation with higher scrap prices not backed by long product demand

The other reason for the recent price increase is the increasing price of scrap, which is not healthy at all if it is not backed up by product demand. Availability in the supply chain has become thinner as manufacturing has strengthened and most regions have been positively surprised over scrap demand. The rebound in November along with production cuts at blast furnaces against the backdrop of the depressed flat steel market has boosted demand at scrap-based electric arc furnaces and thus has also raised demand for ferrous scrap.

Uncertainties may increase  

The elections in the UK in December may bring even more uncertainty depending on the outcome, while a simple tweet can also change things in a heartbeat.

EU producers squeezed by absence of North African outlet, but buffered by lack of imports

Stock levels in the EU are normal to low, and buyers are waiting for some more clarity to order to restock again. The lack of North Africa as a market is putting EU producers under pressure to find places to dispose material. As a result, the EU is becoming very competitive. On the other hand, the lack of imports into the EU market should give EU mills the chance to adjust their prices in line with increased scrap prices. Restocking may start during January and February if the scrap prices keep their vigorous levels.

China remains a force to be reckoned with, especially in Asia

China is now the major world influencer of prices of iron ore, coke, HBI, basic pig iron, slab and billet. China may still not be the major influencer in the markets for hot rolled steel sheets in coils, plates, reinforcing bars and wire rods outside of Asia, but it is certainly dominant in the Asian market. The rest of the world will have to come to terms with that fact in the current market.

China’s domestic focus and semis imports create opportunities

Thanks to good steel consumption in China, Chinese suppliers are not interested in increasing exports. As the prices of Chinese suppliers increase thanks to good demand in their domestic market, other exporters see opportunities to take over. Moreover, Chinese buying of semi-finished steel due to the winter season caps on carbon emissions has been adding steam to regions around China.

Some positive signs  

Destocking and less work in progress inventory in the US are leading to higher transaction prices, despite the political doom and gloom. Warm winter conditions along with low interest rates and liquidity in the global marketplace are among the other positive signs for the market.

Levels of competition still very high

The level of competition in the market is still very high. There is stiff competition for volumes region-wise. Nowadays, there are adequate volumes only in China. Certainly more capacity has to be idled to bring demand and supply into balance and to increase margins in the marketplace.

Scrap inventories depleted in many regions and need replenishing

As for ferrous scrap, the market seems to be playing catch up as inventories in many regions are depleted and need replenishing.

Market outlook to remain relatively stable for first quarter of new year

The market is generally stable in the last quarter of the year and the outlook for the first quarter of the new year is also relatively stable even though conditions are still challenging. As for scrap, the winter market seems to be fairly tight throughout.

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