At the opening of the conference, Murat Cebecioglu, chairman of IREPAS, emphasized that the global long products market has recently been suffering from declining imports and exports and a lack of supply-demand balance.

The IREPAS chairman said the reduced production levels in 2022 have been carried over into 2023 and are able to satisfy actual consumption, which has resulted in an aversion to imported steel due to the lack of certainty, leading to a decline in the scope of international business.

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: Output cuts in EU to bring down scrap prices

Jens Björkman, the chairman of the raw material suppliers committee, summarized the committee meeting findings stating that the past few months have been challenging for the global steel market due to drastic price drops, higher energy prices and weak global demand.

Mr. Björkman pointed out that the energy crisis in the EU has eased, going back to pre-war levels and standing at a 10-year average, though high interest rates still remain a challenge. He said that there is a likelihood of production cuts ahead of the summer, which would bring down scrap prices and orders in the EU.

Regarding the potential consequences of the European Parliament’s recent revision of its Waste Shipment Regulation, Mr. Björkman stated that scrap shipments to non-OECD countries will be a major challenge, fortunately Turkey – which is a major destination for scrap supply – will not be affected. In addition, the committee chairman noted that within a five-year timeframe the EU will consume most of the scrap generated in the region itself since its steel production will shift to electric arc furnaces within the scope of green steel targets.

Aside from multiple challenges, Turkey is facing muted trade activities ahead of the approaching elections amid production cuts and weak demand for finished steel products, the committee chairman stated. He went on to say that once the election period is over Turkey is likely to see some pick-up in domestic business, though the demand in the local market will not be sufficient and so Turkey will have to try to export again. Regarding Turkey’s scrap demand, the committee chairman said that “a slower normal demand” is expected in the coming months.

Traders at IREPAS: Rough times for long steel industry         

Wilhelm Alff, chairman of the traders committee, said that the steel industry, especially the Turkish long steel industry, is going through very rough times amid weak domestic markets, high energy costs, a lot of trade cases, and new competition in the form of new players in the market such as Iran, India, China, the Middle East and Africa. Commenting on the Turkish market situation, the committee chairman said that areas which were previously reachable for Turkish long steel products are now getting less and less so, due to greater competition. He also drew attention to the fact that, as of March 31, Turkey had only used less than five percent of its EU rebar import quota, because of the reduction in EU steel demand and the increasing number of new mills in the region, for instance, the competitive offers from Oman and Egypt. He went on to say that, with the current market prices in the EU, which have been on a drastic downtrend since October last year and are at levels almost equal to import prices, buyers prefer domestic sourcing rather than waiting for late arrivals. The traders committee predicted that the EU quota situation will continue like this for at least another quarter.

Looking at China, Mr. Alff said that China’s tightening of its controls on overcapacity is likely to have a significant effect on market dynamics, resulting in decreased steel output which will support prices in turn. However, he added that this will also depend on how strictly these controls are implemented. The committee chairman stated that the anticipated demand in China failed to materialize after the New Year holidays and so it may be possible to see competitively-priced Chinese steel sold in the export markets. However, the extent to which this will happen depends on the level of demand in China and in the global market. He said that, if Chinese steel demand continues to be weaker than expected, Chinese suppliers may turn to the export markets, while China may face some obstacles due to trade measures.

Regarding the possible outcomes of the EU’s carbon border adjustment mechanism, Alff said that the approval of this mechanism is a significant move and it could face resistance from exporting countries such as China and India as they may consider these measures as unfair practice. He added that these countries may also respond with tariffs on European goods, which could lead to trade frictions. The committee chairman said that the eventual carbon border tax is likely to increase the cost of imported goods that have a heavy carbon footprint, which will result in difficulties for some countries as regards competing in the EU.

Producers at IREPAS: Falling energy costs and scrap prices may create opportunities   

Murat Cebecioğlu, chairman of IREPAS and also chairman of the producers committee, pointed out that the steel industry has been experiencing challenging times amid inflation and rising interest rates, which pose a big problem for investors in making decisions about their investments. He also said that supply and demand are not balanced and that exports and imports are declining everywhere, while adding that capacity utilization rates are way below usual levels. All these factors put pressure on the market, he noted. However, he also pointed to some positive factors, saying that energy costs and scrap prices are coming down.

Commenting on Turkey, the committee chairman said that the country has lost its major traditional export markets and its leading position, adding that the countries to which Turkey used to export, like Egypt, the GCC and Indonesia, have become exporters themselves. Another obstacle facing Turkish exports are trade cases. It is difficult to sell to the US, Canada and the EU and it is impossible to sell to Singapore and Hong Kong. He stated that, with falling energy costs and scrap prices, Turkey may have the chance to do business again. Regarding the steel demand expected in Turkey’s southern region following the devastating earthquakes in February, Mr. Cebecioğlu said that the unfortunate disaster will create demand, not only for the steel industry, but also for downstream segments as well. However, he pointed out that the demand will be spread over years, adding that it is not going to come all at once like people have been saying.

Turning to China, Cebecioğlu said that the Chinese market has not picked up after the New Year holidays, while he indicated that Chinese traders are very aggressive and very much active in the export markets. The IREPAS chairman underlined that China affects all market players because of its big capacity and that the Chinese are exporting to every corner of the world, so “if they stick to reducing production, this might help”.

The applicable duties range between 2.4 percent and 108.5 percent. The antidumping duties were imposed in May 2017.

The products in question currently fall under Customs Tariff Statistics Position Numbers 7213.10.00.11, 7213.10.00.12, 7213.10.00.13, 7213.10.00.90, 7214.20.00.11, 7214.20.00.12, 7214.20.00.13, 7214.20.00.14, 7214.20.00.21, 7214.20.00.22, 7214.20.00.23, 7214.20.00.24, 7214.20.00.31, 7214.20.00.32, 7214.20.00.33, 7214.20.00.34, 7214.20.00.90, 7215.90.00.20, 7215.90.00.30, 7215.90.00.50, 7228.30.00.51, 7228.30.00.52 and 7228.30.00.53.

Accordingly, the CBSA stated that specific normal values for future shipments of certain rebar have been determined for all exporters, including Turkey-based Colakoglu Metalurji A.S., İçdas Çelik Enerji Tersane ve Ulasim A.S., Kaptan Demir Celik Endustrisi ve Ticaret A.S. ve Kroman Çelik Sanayii A.S., that submitted a complete response to the requests for information  effective May 4. For all other exporters of subject goods originating in or exported from China, South Korea and Turkey including Habas and Diler Holding), normal values will be determined by ministerial specification, which are calculated by advancing the export price of the goods by 41 percent.

Meanwhile, specific normal values for future shipments of certain rebar have been determined for Belarus-based OJSC Byelorussian Steel Works (BMZ), Taiwan-based Tung Ho Steel Enterprise Corporation, Portugal-based Metalurgica Galaica, S.A. and Spain-based Celsa Atlantic, S.L. and Nervacero, S.A. effective May 4. For all other exporters of subject goods originating in or exported from Belarus, Taiwan, Hong Kong, China, Japan, Portugal and Spain, normal values will be determined by ministerial specification, which are calculated by advancing the export price of the goods by 108.5 percent.
In addition, the CBSA stated that nor any exporters/manufacturers in China provided a response to the subsidy requests for information, an amount of subsidy for all exporters of goods originating in or exported from China will be determined by ministerial specification and is equal to RMB 469/mt.

The products in question currently fall under Customs Tariff Statistics Position Numbers 7213.10.00.00, 7214.20.00.00, 7215.90.00.90 and 7227.90.00.90.

The reinvestigation is part of the ongoing enforcement of the Canadian International Trade Tribunal’s (CITT) threat of injury finding issued on January 9, 2015, for imports from China, South Korea and Turkey and the CITT’s injury finding issued on May 3, 2017, for imports from Belarus, Taiwan, the Hong Kong Special Administrative Region of the People’s Republic of China, Japan, Portugal and Spain.

Normal values and amounts of subsidy established during this reinvestigation will be effective for the subject goods released from the CBSA on or after the date of the conclusion of the reinvestigation.

The products in question currently fall under Customs Tariff Statistics Position Numbers 7213.10.00.00, 7214.20.00.00, 7215.90.00.90 and 7227.90.00.90.

Expectations for demand and order books in the supply chain of the global long steel products market made a reasonable start to business in 2017, although a sharp correction in scrap prices caused people to hesitate a bit in the EU and the US. However, market sentiment has not changed much and demand is still showing good prospects for 2017 in Europe, the US and Asia.

Turkish suppliers gain relief as Far Eastern markets open up once again

Turkish mills have recently faced certain difficulties in selling reinforcing bars especially due to low demand at home and the current antidumping investigation in the US. Nevertheless, this looks like a temporary situation as positive news from Singapore and Hong Kong show that these markets are open again for Turkish suppliers. This means that expectations for exports of Chinese material are low in such markets, which generates a positive outlook following the sudden drop in demand which had appeared in the market.

January shock-wave caused by steep drop in scrap prices replaced by uptrend in February

Following the shock wave which had seen scrap prices decline significantly within a very short period by the end of January and the subsequent lower long product export prices from Turkey, the market has started to observe prices moving back up again by early February.

Volatility in raw materials market increases price uncertainty

The volatility in the raw materials market, created particularly by a few scrap export deals from the US due to cash flow issues or overstocking, has obviously increased price uncertainty and weakened price stability in the market. The dynamics behind the recent move of scrap exporters still need to be understood by the steel mills, who are also trying to understand the perspective of scrap suppliers for the coming months. Indeed, scrap accumulation was stronger than demand during the past quarter. These build-ups were then sold off, which pressured pricing. The weakening of the Turkish lira has also been pressuring domestic demand in Turkey and thereby also pressuring scrap imports, as investments in the country have slowed. Since Turkey is the world’s largest scrap importer, its demand levels are important for the scrap markets. Long steel product prices in the second quarter should be adjusted because of the correction seen in raw material prices.

Long steel demand still weak in Latin America

Long steel demand in Latin America remains weak, with no sign of a recovery in the short term. That said, current demand in the US, Europe and Asia are positives in the global market. The supply side is adapting in order to maintain reasonable returns for business.

Lower Chinese exports continue to give regional markets tailwind

In general, demand is stable-to-strong and lower exports of steel products from China to the rest of the world are continuing to give regional markets tailwind. Demand outstrips actual supply in several regions because of existing dumping rulings and pending ones. This may not yet be globally true, but is increasingly the case across the world. Where no dumping barriers exist, or where demand really exceeds supply (as for billets in Asia), buyers are constantly looking for other alternatives to China which has been setting the price.

Upward trend anticipated on back of balanced supply

So far supply feels balanced and it seems that an upward trend will start soon; however, antidumping cases, safeguard measures and import taxes are still among the major factors.

GDP growth in major regions creates positive sentiment

The GDP growth in the major steel-consuming regions and countries creates a positive sentiment in the market despite the questions raised by the situation in Turkey and to some extent by that in Brazil. The aggressive growth policy of new US president Trump also contributes to the positive sentiment in the market. If such sentiment is supported by Chinese exporters, 2017 might be a very good year. There seems to be no export rush on the Chinese mills’ side immediately after the Lunar New Year holiday and, as such, the trend of stable prices seems to be holding.

Competition remains strong despite trade measures

Competition remains strong in the global markets, but is restricted in many areas for different products due to antidumping regulations and threats. That said, it cannot be described as chaotic anymore.

Turkish trade driving both the international scrap and rebar markets

Due to the recent re-alignment of scrap prices versus iron ore prices, we have seen new supply routes open up, for example, for billets and reinforcing bars from Turkey to Asia. Chinese producers are now facing real competition which is not self-inflicted. We can now conclude that Turkish trade is driving both the international scrap market and as well as the international reinforcing bar market.

Satisfactory outlook but largely dependent on developments in Asian inter-trade market

Under such circumstances, the market is still fluctuating as long product producers and consumers are facing months of uncertainty. The outlook will depend largely on developments in the Asian inter-trade market but as of now it is satisfactory.

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Accordingly, the CBSA calculated preliminary antidumping duties ranging from one percent to 109.2 percent for the six locations. Provisional duties are now payable on the subject goods that are released from customs on or after January 3, 2017. The investigation was launched in August 2016 upon a complaint received from local producers AltaSteel Ltd, ArcelorMittal Long Products Canada and Gerdeau Longsteel North America.

The preliminary dumping margins announced per producer/exporter are as follows:

• Byelorussian Steel Works (Belarus) 19.8%
• Feng Hsin Steel Co., Ltd. (Taiwan) 1.0%
• Lo-Toun Steel & Iron Works Co., Ltd.  (Taiwan) 9.9%
• Power Steel Co., Ltd. (Taiwan) 109.2%
• Tung Ho Steel Enterprise Corp. (Taiwan) 0%
• Shiu Wing Steel Limited (Hong Kong) 53.3%
• Marubeni-Itochu Steel Inc. (Japan) 109.2%
• Metalurgica Galaica, S.A. (Portugal) 2.2%
• Celsa Atlantic, S.L. (Spain) 15.8%
• Nervacero S.A. (Spain) 32.5%
• All Other Exporters  (Spain) 109.2%

The Tribunal’s preliminary injury inquiry was conducted pursuant to subsection 34(2) of the Special Import Measures Act as a result of the initiation of a dumping investigation by the President of the Canada Border Services Agency (CBSA). The CBSA will continue its investigation and, by November 17, 2016, will issue a preliminary determination.

The global long steel products market has come back to life at the end of October and in early November as speculative purchasing has started to be observed following the downward spiral of scrap prices seen after the last IREPAS meeting held in Rome in early October, which had made it almost impossible to sell products in the market. The market moved on a downward trend during October against all traditional seasonal expectations. Mills suffered either from high inventories of expensive raw materials or expensive long steel products. Fabricators, on the other hand, enjoyed low-priced purchases to cover their low-priced long-term project businesses.

Buyers start to conclude purchases as prices stabilize

It seems that buyers have started to think that the downward trend of product prices will not be back at least for a while in conjunction with a certain strengthening in scrap and billet prices, and so they consider buying as a low-risk option as prices have stabilized. Subsequently, mills have recently started to see better order books, though at very low price levels.

No change in demand situation in US

Demand in the US market has not shown any change and supply is still higher than demand due to both domestic production and imports.

Many EAF mills in Asia halt their melting shops

In Asia, many EAF mills are stopping their melting shops and instead are rolling billets supplied from China, as observed in Malaysia, Thailand, Taiwan and Hong Kong. This is creating a new balance in the scrap markets, which are now characterized by greater availability.

China achieves record exports in September

Despite its slightly reduced steel production, China achieved record-high exports in September. Producers are not able to cover their total costs on exports, but almost all of them are still selling for cash flow purposes or to dilute fixed costs.

Almost impossible for producers to make a profit, except in US

This is a period when cost does not matter. At present, there is almost no chance for producers to make a profit, except in the US where the market is very well protected and so sales prices are about $100/mt above average global export prices. Politics comes before business in most cases and therefore markets will disappear one by one and export will be very difficult even for the cheapest-cost producers. The markets are closing because of safeguard or dumping measures, on the one hand, while some producers with state backing are dumping more, on the other hand. As a result, life for producers who have no protection is getting more difficult with each passing day.

Low interest from investors in steel – should help correct supply excess

The financial performance of mills around the world is very poor, to say the least. Recent reports indicate negative results for many mills, also in China. Consequently, interest from investors in the steel business is at historical low levels and this should correct the excess of supply. This could be a sign that we are very close to the lower part of the current market cycle.

Downtrend of ferrous scrap prices seems to have stopped

The downward trend of ferrous scrap prices in the international market has stopped and prices are trying to head up or at least to stabilize.

China’s output cuts still insufficient 

China has started reducing production since July although the output reductions have been insufficient so far. The reduction of outputs in China is expected to accelerate in the coming months. The reduction in supply is extremely important as 80 percent of what is being produced currently can be sold at higher prices… anywhere.

Market suffering from massive oversupply

The market is suffering from massive oversupply. Therefore, competition to sell the remaining 20 percent of output is extremely intense and will remain so until China reduces its output significantly.

More and more protectionist measures expected

Under current market circumstances, more protectionist measures will be announced with each month and many of these will not even allow any defense. More and more protectionist measures will cite critical circumstances for any reason. Such market protectionism will drive reductions in exports and, as a consequence, also in production.

Long steel products market remains very unstable

The long steel products market is very unstable currently and there are no real signs of a consistent improvement yet. The outlook is very challenging for producers with prices at low levels. Only the situation in the US market can be described as satisfactory in an otherwise unpredictable global market.

How long more can producers afford to sustain losses?

Most mills are selling below cost today, and so all depends how much they can afford in terms of losses, which will determine how low prices can go.

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Hong Kong was the second most popular choice of the IREPAS members as per the results of last summer’s poll for the future venues of our meetings.

Following the 63rd meeting held in Madrid in October 2010, we are now heading to Hong Kong for our first gathering of 2011 which is going to be held at the Sheraton Hong Kong Hotel & Towers, between April 10-12, 2011.

Please check www.SteelOrbisEvents.com for further information