19:00 – 22:00                   Welcome cocktail at Metropol Palace Hotel, Belgrade

Day 2: Monday, March 2, 2020

09:00 – 09:15                   Welcome address by Chairman of IREPAS

09:15 – 10:15                     SESSION ONE – Economic developments and expectations

Marko Cadez, Chamber of Commerce and Industry of Serbia / President
10:15 – 10:45                     Networking break

10:45 – 12:30                     SESSION TWO – Critical changes in global long steel markets

-    Long products market outlook

• Overview of global construction sector
• Steel and long products consumption
• Rebar markets
• International price situation

Alexander Gordienko, Celsa Group

-     Latest developments in the European steel market

• General macroeconomic outlook in the EU
• Overview of steel-using sectors (construction, automotive, mechanical engineering, electrical appliances)
• Trends in apparent steel consumption
• Trends in imports from third countries and main exporting countries to the EU

Alessandro Sciamarelli, European Steel Association (EUROFER) / Senior Economic Analysis Manager

-     Dry bulk market outlook and effects of the low sulphur regulation (IMO 2020)

• What happened in 2019?
  Recent trends
  IMO 2020
  What can we expect moving forward?

Enrico Paglia, Banchero Costa / Research Manager

12:30 – 14:30                    Networking lunch

14:30 – 16:30                    IREPAS Committee Meetings

• 14:30 – 16:30 IREPAS Producers Committee (by invitation only)
• 14:30 – 16:30 IREPAS Raw Material Suppliers Committee (by invitation only)
• 14:30 – 16:30 IREPAS Traders Committee (open to all attendees)

16:00 – 18:00                  Cocktail Reception at Metropol Palace Hotel, Belgrade

Day 3: Tuesday, March 3,2020

09:30 – 11:00                   SESSION THREE – Panel with Committee Chairmen

• IREPAS Producers Committee
• IREPAS Raw Material Suppliers Committee
• IREPAS Traders Committee

The global long steel products market is surely in a better shape today although we have yet to emerge from a slow-activity period due to the holidays in Europe and around the globe. However, real sentiment in the market is pretty positive, especially after the announcement that a trade deal between the US and China will be signed. That said, we have to keep in mind the possibility that any trade deal may prove to be elusive.

Post-holiday developments still awaited in North American markets

The North American markets have been in holiday mode since mid-December and so it is hard to predict the market, but prices were stable at best with higher domestic production and reduced demand at the year-end. Price increases are not expected and, accordingly, the recently increased scrap prices seem to be firming internationally and increasing in the North American domestic markets.

General expectation is for a correction in scrap prices

Indeed, the general expectation for scrap prices is that they will show some correction since reinforcing bar prices became stuck at the $450/mt level and there is no sign in the market that prices will get any better. Mills’ order books in Turkey are less than four weeks, which explains the reason why long product sales prices are not able to cope with the latest increase in scrap prices.

Turkey forced to shift scrap focus to EU and US, demand in Q1 likely to be solid

Supply of scrap from the Black Sea region has dried up as a result of Russia’s export quotas on the raw material. For Turkey, this has meant that supply has to come from Europe and the US to a larger extent than previously. Consequently, the shortage of ferrous scrap in some areas has pushed scrap prices back up in the import market in Turkey. The first quarter of 2020 will likely see solid demand for the raw material.

Output cuts in Europe and US help to stabilize prices

Production seems to have bottomed out in the second half of 2019, with producers in markets in the Western countries, particularly in Europe and even in the US, idling blast furnaces and already taking necessary measures to establish a balance between supply and demand, which has helped to stabilize prices. Thus, a downturn in the short run is not expected unless something unexpected happens on the demand side. However, under such circumstances, one should not expect healthy margins. Of course, the recent increase in iron ore prices driven by Chinese demand must also be noted.

Developments in China remain positive for global steel industry

China continues to stimulate its economy, which provides a boost to the steel industry. Steel exports from China continue to decline and the country has the ambition to use its domestic scrap supply for its own production. The positive news from China will continue to support steel prices, while expectations of a strong Chinese currency will definitely have a positive impact on commodity prices.

Positive developments for markets also seen in Europe

PMI figures in Europe have rebounded with manufacturing looking to recoup some of the losses incurred during the fall of 2019. Another positive development for the market is that the UK has finally ended the confusion about who is in charge of the country and how it will proceed in the coming period.

New IMO regulation may contribute to further regionalization of trade

The IMO 2020 regulation on sulphur emissions in global shipping will mean that longer-distance transportation takes a hit compared with shorter distances and this may lead to a further regionalization of trade.

Situation in Iran needs to be watched

Iran is obviously a major exporter of metal products and steel at competitive prices and, given recent developments, we may be set for some surprises in the market. The oil price is already up as a consequence of the developments in question.

General market outlook is satisfactory despite varying stability in regions

Previous fears of a possible recession seem to have been overblown. Competition in the global long products market is still high and may become even tougher. Due to regionalization of trade and protectionism, the current status of the market in certain regions can be described as stable but unstable in others. However, in general the outlook is satisfactory.

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The current environment in the global long steel products market is confusing. The raw material for blast furnaces is becoming cheaper, while ferrous scrap is getting more expensive and we observe increasing prices for both reinforcing bars and hot rolled coils. Customers are making inquiries for longer than they normally should, and mills are incurring greater losses than they can afford and so they are halting production and have stopped offering. However, the current price increase should not hold long because the real problem is demand.

Scrap prices start to move up from bottom levels

There is enough scrap availability and indeed prices in the US domestic market are up by US$20 per gross ton. It looks like ferrous scrap prices internationally have hit the bottom and started to move up again. In general, the supply chain has been very low on scrap inventory, which has meant that restocking has pushed international prices higher.

China drives international prices of many products

China is driving the international prices of basic pig iron, hot briquetted iron (HBI), HRC and billet/slab, thereby realigning flows and supply-demand.

Worrying contraction in Brazil

Steel production in Brazil contracted by 7.3 percent in the first nine months this year, according to the Brazilian Steel Institute (IABr) and Brazilian exports were down 3.0 percent from the same period last year. Market expectations for internal GDP growth in Brazil are for only 0.91 percent in the current year and 2.0 percent in 2020. The situation for Brazilian semi-finished exports is difficult because billet has dropped to its lowest price of the last three years. The US market used to have better prices for slab exporters, but in recent weeks the price has dropped dramatically.

Rise in German industrial activity raises hopes in Europe, but too many uncertainties remain

The situation in Europe is unchanged. Industrial activity bottomed out and then increased in the German market, bringing with it the surrounding areas in Europe. However, there are still too many uncertainties and, with winter approaching, the situation regarding what may happen in the first quarter next year remains unclear. Political tensions and lack of clarity surrounding Brexit continue to be observed and therefore sentiment remains uncertain.

Buying activity in China provides a boost

Chinese buying activity has strengthened the sector as we are heading into the winter period when emissions regulations will be stricter. Internal steel consumption in China is still very high and the country is not increasing its exports. The situation in China looks good at least until the Chinese New Year holidays.

Low interest rates may be supporting factor, only obstacle is low growth expectations

Low interest rates and liquidity may also be supporting factors in the long run. The only obstacle is low growth expectations.

Longs prices should follow scrap prices, EU mills expected to raise prices shortly

Long product prices should move in line with scrap prices which have begun to bottom up. The lack of competitive import options should help EU mills to raise prices shortly. Demand in some EU countries remains strong but has been weakening in others.

Levels of competition in global market remain high

The levels of competition in the global market are still high because of the lack of demand in main markets like Europe and the US. Also, trade tensions and commercial barriers are increasing around the world, reducing options for exporters. Overcapacities are preventing prices from bouncing back. Indian, Turkish, Russian, Brazilian and Southeast Asian suppliers are competing for every dollar in China. Agreements in China-US trade talks could bring a little breather.

Regionalization of trade continues, nervous supply chain reacts with sharper price spikes

Freights are being impacted by the IMO 2020 regulation, meaning long-distance shipments will be more expensive. Accordingly, regionalization of trade continues. Lead times are very short and no one wants to hold unnecessary inventory. The nervous supply chain therefore reacts with sharper price spikes.

Market outlook is challenging

The ferrous scrap market has seen a fairly decent rebound and solid demand with balanced availability. The markets have been stable for the last week or ten days. But the future is uncertain as the outlook is not good because of the lack of demand and of price levels. The market outlook can be described as challenging.

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At the opening of the conference, Murat Cebecioglu, chairman of IREPAS, emphasized that the industry is experiencing a very difficult period for world trade. Cebecioglu said that the US tariffs have triggered similar protectionist reactions from certain other countries. Not only the US, but others as well are using every possible alternative to assign maximum antidumping or countervailing duties or quotas in each case, whether this is fair or not, he added.

The IREPAS chairman also stated that the global long steel products market is depressed at the moment and added that many steel producers have already started slowing down their operations, extending maintenance and idling facilities.

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: Trade barriers contribute to slower growth

Jens Björkman, the chairman of the raw material suppliers committee, said that scrap prices have seen dramatic decreases in past months. He added that trade barriers are negatively affecting growth and in turn scrap generation. Trade conflicts between the US and China, Turkey and the US, and South Korea and Japan have all contributed to slower growth in the past year.

Commenting on Russia’s quota and license system for scrap exports, Mr. Björkman said that this will limit scrap availability from Russia, affecting tonnages. He pointed out that the quota and license system creates a bit of confusion as it depends on the exporting region, while he added that scrap exports from Russia are expected to be 30-50 percent lower.

Björkman also highlighted the issue of the new International Maritime Organization (IMO) regulation, that will limit sulphur dioxide emissions as of January 1, 2020, explaining that this will raise logistics costs and indeed has already done so, as the number of ocean-going vessels has been reduced to comply with this new rule, and significant price hikes in logistics costs have been witnessed in recent months.

He also pointed out that the slowdown in the automotive industry is affecting the whole supply chain, posing a very big challenge for recyclers as it is one of the largest industries that recycle. The committee chairman said that another problem last year was German recyclers’ insufficient capacity for incineration, which is used to get rid of organic waste from the shredding process.

He went on to say that the major challenge for the raw materials segment is the recession in Turkey, with demand for construction steel declining and scrap demand going down as well. Mr. Björkman said he thought this situation is likely to continue for at least one more year and will result in lower scrap prices amid reduced demand. He added that scrap suppliers have already witnessed a 15-20 percent decline in scrap inflow and indicated that this trend is expected to continue.

Regarding the declines in iron ore prices, the committee chairman said that there is still a structural deficit when it comes to iron ore supply. Although he said that it is difficult to talk about prices for the long term, he stated that current iron ore availability is below necessary levels because of the Vale dam disaster.

Traders at IREPAS agree EU quota changes specifically target Turkey

Wilhelm Alff from Duferco, the chairman of the traders committee, said that the main question is whether the trade conflict between the US and China is coming to an end. He expressed the view that it will probably go on as long as the administrations do not change. “In any case, the result will not change much as China is not in the US market,” Mr. Alff said. Commenting on the possible reduction in the US of antidumping duties on Turkish rebar, the committee chairman said that this will not help because Turkey cannot compete with domestic producers nor with Mexico which has zero duty. Against this backdrop of trade barriers, he said the role of a trader is becoming more vital as the trader acts as a risk-taker.

He pointed out that electric arc furnaces have a $40-50/mt price advantage compared to blast furnaces and said that the traders committee expects that this gap will become more balanced in the near future as they believe the downtrend in scrap prices seems to reaching the end.

Mr. Alff said that, with Turkey reducing capacity utilization to approximately 50 percent, a substantial reduction has been seen in the material which is available in the market. He added that, as the US and EU markets are closed, Turkish mills are looking to the Far East, Yemen, Israel and Africa. Turkish exporters have already taken away some market shares from the Chinese mills who had been dominant in the Far Eastern markets. The Duferco official pointed out that, although Chinese mills have increased their production, most of this has been consumed domestically and put into stocks.

The committee chairman said that China will not be entirely absent from the market in terms of long products, but definitely they can hardly compete with Turkey and Middle Eastern countries. Turkey seems to be in a better position today in the ASEAN region; however, it is out of necessity rather than out of desire, he noted.

Commenting on the recent changes in the EU safeguard duty, Alff agreed that the changes are specifically targeting Turkey. He went on to point out that, while determining the quota, the EU left out the year when Turkey had exported the most products to the EU and that, as a result, Turkey got a relatively small quota. He also remarked that there are other countries concerning which you would wonder why they received a large quota that they will probably never use.

Producers at IREPAS: Only bright spot is possible reduction in US AD rates on Turkish rebar

Murat Cebecioğlu, chairman of IREPAS and also of the producers committee, said that during the producers committee meeting the main topic under discussion was protectionism. Recalling that the due to tariffs in the US it is not possible for Turkey to export to this market, he pointed out, however, that the preliminary results of the AD review in the US on Turkish rebar signal that the duty rates might come down. Mr. Cebecioğlu said that, if this happens, it will help Turkish exporters. He added that trade measures have changed the way business is shaped. “Exporters become importers and imports become exporters,” he noted.

The IREPAS chairman stated that most Turkish producers are slowing down their operations or are extending maintenance periods. He went on to remark that, with the major markets closed, Turkey is left with South America and Africa for its exports, while the number one and number two markets for Turkish exports are currently Yemen and Israel. “At the moment, things do not look so bright, if protectionist measures keep on like this,” he said. He added that the only bright spot is the antidumping duty review in the US. Given the fact that the EU is trying to toughen the rules on safeguards, he said that he did not really know what to expect but commented that “things are not good at the moment”.

Amid difficulties in finished steel sales, Turkish exporters have turned to billet exports. The producers committee chairman said that, if the current situation continues, Turkish billet exports might see further increases.

Commenting on the possible change in the US tariff on Turkish steel, Mr. Cebecioğlu said that, if the tariffs are replaced with a quota, this will be to Turkey’s advantage, although he said he did not know which year they would take into consideration to set up quotas. He said he hoped a quota is established, though adding that he did not know what the US side will ask in return.

Regarding the new changes suggested in billet import duty in Egypt, Cebecioğlu said that a 50 percent reduction in the duty rate would give importers relief as Egypt has traditionally been a billet import market.

Mr. Cebecioglu added that there is positive sentiment among the European based steel producers as there is certain growth in Europe but it certainly is not enough.