The overall business environment in the global long steel products market remains relatively stable. However, regional differences have become more pronounced than ever. Protectionist measures in the United States, combined with the implementation of CBAM in Europe and the upcoming reduction of EU import quotas, are reshaping trade patterns and market dynamics.

Ongoing conflicts continue to create uncertainty and raise costs

At the same time, the ongoing conflicts in Ukraine and the Middle East continue to create uncertainty, disrupt trade flows and influence supply-demand balances across multiple regions. Higher oil and natural gas prices have increased transportation and production costs, while steel availability from Gulf region suppliers has become extremely limited. Marine insurance costs for cargoes have also risen due to increased geopolitical risks. Expectations that these disruptions will be short-lived have largely disappeared. As a result, many distributors and stockists are holding onto inventories amid concerns about future supply availability and stock replacement costs. Consequently, the market remains highly fragmented, with conditions varying considerably depending on geography.

EU market sees last-minute import buying ahead of new quota system on July 1

In the European Union and in the United Kingdom, the market is now starting to search for a new equilibrium because of the changes in the import regime from July 1. During the past few weeks, some last-minute import buying has been taking place, as buyers and traders try to position themselves before the new quota system enters into effect. After this, market players will have to adjust their strategy to the supply which is actually available in the market. There will still be imports, of course, and there will still be competition, but buyers will have to build their strategies around actual market availability, not around the cheapest theoretical import offer.

Scrap prices remain strong despite weak demand

There is no demand to support the continuing strength of scrap prices, but it seems that prices will stay where they were before the Eid holiday or they may come down by a few dollars to motivate Turkish buyers to resume buying. Deep sea scrap prices for Turkey remain some way above US$400/mt CFR despite weak Turkish rebar sales, while the strong scrap prices provide support for finished product prices. Meanwhile, Turkish mills do not expect much long product demand from the EU because of the new quotas to be introduced shortly in the region. Regional differences will certainly create different results for different regions and producers, especially for those who source scrap from the US and the EU and need to export their products.

Turkey’s production costs may increase, political situation to impact investment

Turkish mills were enjoying cheap energy costs due to the rainfall during the winter season. This will most probably end when temperatures start rising and the country starts using cooling systems. With the political turmoil in the country, investments will slow down, which will also be another factor causing demand for long steel to slacken.

Demand for semis due to Iran’s absence contributes to higher long steel costs

Demand for semis due to Iran’s absence is another factor contributing to increased costs of long products. In this context, Chinese exports of slabs and billets increased to around 900,000 mt in the January-April period this year.

Long steel market in Germany remains very weak

The market in Germany is still very weak. After the shockwave of higher energy prices (the impact of the Iran war) and price increases for all steel products and for logistics, many projects were put on hold. Consequently, cut and bend prices did not move up but are on the way back down. Benders are desperately looking for orders at somehow manageable prices. German and Polish mills have had to adjust prices down as well, otherwise benders do not buy. So, there has been a drop of around €30/mt in prices despite the seasonal improvement which reflects the level of investment in Germany right now. Better prices for benders from imports are practically not available anymore. Reduced quotas, CBAM and high ocean freight rates make business very difficult. New building permits went down by 10-15 percent and industrial projects by 20-30 percent. There is not even any input from the public sector.

Mixed bag of positive and negative factors in US market

In the United States, inflation remains a concern, and expectations for interest rate cuts have largely been pushed back, with higher rates now expected to continue into 2027. This has negatively impacted housing and construction activity, keeping demand relatively subdued. Meanwhile, steel imports remain restricted by the 50 percent Section 232 tariffs, higher freight costs and logistical uncertainties. Reduced import competition continues to support a gradual increase in domestic steel prices despite overall moderate demand. On the other hand, domestic steel prices are moving closer to import parity, which may improve future import opportunities. In addition, inventories remain relatively low, and continued investments in AI infrastructure, energy and industrial projects are providing some support for steel demand. The primary area of growth remains AI infrastructure and data center investments, although this business is largely supplied directly by domestic mills and these big projects are for consumption of reinforcing steel 12-18 months from now. However, these positives are still overshadowed by geopolitical uncertainty, high interest rates and weak construction activity.

Some positive developments in terms of investments

One of the key positives in the marketplace is the substantial level of investment being directed toward infrastructure projects, energy-related developments and data centers, all of which generate significant demand for reinforcing steel products. In addition, many governments in developed economies are increasingly focused on addressing housing affordability challenges. Policies aimed at expanding residential construction could support additional demand for long steel products in the medium term. Another positive factor for certain markets is the implementation of measures designed to protect domestic industries from unfairly priced imports. While these measures support local producers, they also reduce market access opportunities for exporting countries, highlighting the differing impacts across regions. There are areas like the Balkan and Baltic regions where demand is really great and investment in infrastructure is huge.

China’s crude steel output decreases, its iron ore imports increase

China’s crude steel production decreased by 4.1 percent in January-April, but its iron ore imports increased by eight percent to 418 million mt in the same period, and port stocks are close to 160 million mt. This is a very strange situation: steel production is characterized by weakness, but iron ore imports remain strong.

Divergence between open and protected markets

Competition remains extremely intense in international markets that are open to imports. Excess production capacity in several regions continues to put pressure on prices and margins. In contrast, markets that benefit from trade protection measures or restricted import access generally experience more balanced competitive conditions.

Current market status stable and challenging, outlook varies according to region

Under these circumstances, the current status of the market can be described as stable and challenging. While demand remains generally subdued in many regions, market participants have largely adapted to current conditions and no major short-term disruptions are anticipated. The outlook, on the other hand, varies significantly by region. In Europe and the United States, market sentiment is relatively decent, supported by infrastructure spending and protective trade measures. In many other parts of the world, however, the outlook remains difficult to predict.

Supply side will need to be monitored if Middle East crisis is resolved

Even if geopolitical tensions in the Middle East ease, the resulting increase in availability of supply could place additional pressure on already oversupplied open-trade markets. Furthermore, the current interest rate environment continues to weigh on construction activity and investment decisions in several regions.

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There were 99 representatives from 41 different producers among the 386 registered delegates from a total of 49 different countries. There were also 86 registrations representing 41 different raw material suppliers.

At the opening of the conference, Ioannis Manessis, chairman of IREPAS, said that two major conflicts – one in Ukraine and the other in Iran — have consequences for global trade in general and serious repercussions for the industry in particular. He said steel trade has been affected by both demand destruction and supply disruptions, as well as by elevated energy costs, higher freight rates and the practical difficulty of securing vessels on time to transport materials.

Mr Manessis added that protectionism continues to intensify at the same time. IREPAS chairman also said that real demand in the global long products sector remains subdued while geopolitical tensions have driven up freight, energy, and raw material costs. Combined with some degree of inventory replenishment, this has supported higher prices he concluded.

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: Tighter supply, geopolitics reshape global scrap market

Speaking at the panel session, Jens Björkman from Stena Metal International and also chairman of the raw material suppliers committee, shared the committee’s assessments of the current dynamics and difficulties in the global raw material markets. Mr. Björkman highlighted significant shifts in global market dynamics over the past year, pointing to tighter supply conditions, changing trade flows and increasing geopolitical influence on pricing and demand. One of the key developments has been the slowdown in Chinese steel output, with March production falling to the lowest monthly level in six years. This decline, linked to weaker margins and stricter controls, has supported sentiment in other regions, while iron ore prices have remained relatively firm at $105-110/mt due to supply-side constraints. India continues to stand out as a major growth market, supported by strong domestic sponge iron production. This has reduced its reliance on scrap imports, although the country could be an attractive destination, based on freight costs and pricing conditions.

The chairman of the raw material suppliers committee stated that, in Europe, safeguard measures and regulatory frameworks have reinforced protectionist dynamics, supporting intra-regional scrap demand. However, concerns persist over high energy costs and the risk of stagflation, which could weigh on longer-term demand. In the United States, stronger domestic steel production has boosted internal demand for raw materials. At the same time, the attractiveness of scrap exports has declined, particularly for high-quality grades, as supply increasingly shifts toward domestic consumption.

Mr. Björkman pointed out that Turkey has seen improved sentiment, supported by stronger steel production and demand. Reduced semis supply from Iran has increased reliance on scrap imports, pushing prices to around $410/mt, an annual high. Rising freight costs, driven by higher bunker fuel prices and disruptions of oil shipments through the Strait of Hormuz, have further supported pricing.

Mr. Björkman emphasized that there is no global surplus of scrap supply, as scrap continues to be steadily consumed. Europe exports around 19-20 million mt annually, reflecting limited domestic demand growth, but future availability may tighten due to increasing EAF adoption and regulatory constraints. Traditional importers in the Middle East may face challenges as scrap availability tightens in Europe and the US. Meanwhile, he noted, growing scrap generation and processing capacity in Asia, particularly in China and India, could gradually reshape global trade flows.

Mr. Björkman said that increasing regulatory requirements, particularly EU waste shipment rules, are expected to drive investment in sorting and processing. At the same time, tighter credit conditions and reduced availability of trade finance are adding complexity to global scrap trade. He went on to say that, despite strong pricing and demand conditions, the market outlook remains uncertain. Energy prices, economic growth and geopolitical developments continue to pose risks, while elevated oil prices at around $110 per barrel are still considered manageable for now. However, in conclusion, he commented that any deterioration in demand or purchasing power could quickly shift the market into a more challenging phase.

Traders at IREPAS: Geopolitical tensions and higher costs disrupt steel trade flows

Speaking during the panel session, Wilhelm Alff, director at Duferco and chairman of the traders committee, shared the committee’s assessment of current market conditions, highlighting weakening demand, regulatory pressures and rising geopolitical risks. Mr. Alff reminded that crude steel production in China reached around 960 million mt in 2025, while data from the first quarter of 2026 indicate that output may decline further or at best remain stable, with no clear signs of growth. In China, the sharpest drop was observed in the rebar segment, in which production fell by 12 percent, reflecting the ongoing downturn in the construction sector. The only improvement in China was the growth of more than 10 percent in iron ore inventories, mainly due to strategic stock building, highlighting the disconnect between raw material positioning and weak end-user demand.

This weakness in demand is particularly evident in Europe, where the overall economic outlook remains poor. Public spending is increasingly being redirected toward defense and social support rather than infrastructure, especially in Germany, limiting the recovery potential for steel consumption. The committee also pointed out that existing production capacity in the EU continues to exceed demand, noting that even prolonged production stoppages by major producers have had little visible impact on the market. A key concern for traders remains the implementation of the EU’s Carbon Border Adjustment Mechanism (CBAM). The committee chairman emphasized that, in the current environment, traders are advised to use default emission values when calculating CBAM costs in order to avoid risks, although this approach increases cost exposure. Uncertainty surrounding calculation methods and verification procedures continues to complicate transactions, making it essential to involve producers and clearly define contract terms.

In addition, recent changes to the EU safeguard system have added further pressure. Quotas have been reduced by nearly 50 percent, while out-of-quota duties may rise to as high as 50 percent. Market participants criticized the lack of adjustment in country-specific quotas, even where suppliers have not delivered material for extended periods. As a result, portions of the quota system remain effectively unusable, further tightening supply and negatively affecting buyers and end-users in the region. Against this backdrop, traders also highlighted the growing impact of geopolitical tensions, particularly in the Middle East. According to Mr. Alff, escalating tensions have tightened raw material supply chains and pushed costs higher, significantly slowing trading activity. Mills are increasingly relying on short-term sourcing strategies and opportunistic cargoes, while additional costs for transporting billets overland from Omani ports are estimated at around $40/mt. Severe port congestion is further complicating trade flows, making execution increasingly difficult. Despite these disruptions, the committee believes that the current situation is still being treated as temporary rather than structural. However, logistical constraints, especially in key maritime routes, continue to limit cargo movements and add uncertainty to global trade.

Commenting on global trade flows, Mr. Alff noted that exporters are likely to face growing challenges in accessing traditional markets. Tightening EU quotas and rising protectionism are forcing suppliers to seek alternative destinations, though options are becoming increasingly limited as more countries introduce similar trade barriers. Africa is expected to remain a key growth market in the medium term, supported by rising imports from Asia, particularly China, although the expansion of local production capacity and potential protectionist measures could gradually slow this trend.

Regarding China, the committee expects semi-finished steel exports to remain at elevated levels but under tighter control, as the Chinese authorities are likely to manage trade flows more actively to avoid another sharp surge. While the ongoing crisis in the Gulf region could support demand for Chinese material, its impact will largely depend on logistical conditions and the ability to move cargoes efficiently.

Looking at other regions, market conditions in the US and Latin America were described as relatively stable, with the US benefiting from solid demand driven by public infrastructure projects.

Overall, the traders committee underlined that the global steel market is entering a period of heightened uncertainty, shaped by weak demand in key regions, regulatory changes and geopolitical risks. In such an environment, Alff concluded that it is extremely difficult to predict price trends, emphasizing that market participants will need to continuously monitor developments and adjust their strategies accordingly.

Producers at IREPAS: Global steel sector under pressure from costs and weak growth

Alex Gordienko, export director of Spain’s CELSA Group and representing the producers committee, stated, in sharing the producers committee’s findings, that the global steel industry is facing increasing pressure from rising costs, weak economic growth and regulatory complexity. He noted that uncertainty remains high, particularly due to ongoing geopolitical tensions. Mr. Gordienko indicated that raw material prices have risen significantly, while the ability to pass these costs on to customers remains limited. As a result, margins across the industry are under sustained pressure, with finished steel prices failing to fully reflect higher input costs.

Mr. Gordienko noted that economic growth remains subdued across many regions, limiting the potential for a meaningful recovery in steel demand. He warned that current conditions reflect a fragile balance, with demand holding but lacking strong momentum. He described energy markets as highly volatile, largely due to tensions in the Middle East, adding that there is no clear timeline for a resolution and that a prolonged conflict could significantly worsen market conditions.

Mr. Gordienko went on to state that trade policy remains a key theme, with the EU’s Carbon Border Adjustment Mechanism (CBAM) at the center of discussions.

CBAM is seen as a mechanism that will gradually level carbon costs globally, encouraging countries such as Turkey, China and India to develop their own carbon pricing systems.

He said that, while CBAM is not expected to trigger immediate price changes, producers anticipate a medium-term disruption. By 2027, mills with verified emissions data are expected to gain a competitive advantage, as buyers increasingly prioritize suppliers able to provide reliable carbon data. Currently, only a limited number of suppliers, particularly in Japan and South Korea, are fully prepared for these requirements.

Meanwhile, the other restrictive factor, he pointed out, is that a new quota system stricter than the EU’s framework is expected to be introduced in the UK.

Mr. Gordienko commented that logistical challenges are adding further pressure, particularly in the Middle East, where port congestion is disrupting cargo flows. Limited truck availability and rising freight costs, driven by higher bunker fuel prices and fuel shortages, are increasing delivery costs for producers. He also stated that production disruptions in Iran have significantly affected global semis supply. Publicly available information indicates that facilities representing around 10 million mt of capacity have been heavily damaged, with recovery timelines ranging from six to 12 months. Iran exported approximately 3 million mt of semis in 2025, with around 75 percent directed to Asia. The disruption has contributed to increased Chinese semi-finished exports, particularly in March, as China moved to fill the supply gap. In the meantime, diesel shortages in Europe and transportation constraints are further amplifying cost pressures, with freight rates rising faster than oil prices.

On the raw materials side, Gordienko stated that availability remains a structural constraint. European producers, heavily reliant on scrap for electric arc furnace-based production, face limited flexibility in switching to alternative inputs such as HBI due to high energy requirements. This suggests limited short-term changes in production routes.

Lastly, he shared his prediction regarding the market outlook. Despite relatively stable demand and pricing conditions, the overall outlook remains uncertain. In conclusion, he said that energy prices, geopolitical developments and cost pressures continue to pose significant risks, leaving the global steel industry in a fragile and unpredictable environment.

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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Due the war in the Middle East, levels of uncertainty have surged in the global long steel products market. Energy prices are flying high, supply chains have been disrupted, bunker oil and freight rates are up and stocks are down. It is too early to predict the overall impact of the war. While concerns regarding deliveries of cargoes originating from regions in the East have helped push prices up in the Western markets, demand is not improving, which comes as no surprise especially when we have no clue about how long this war will continue or to what extent it might spread. Another major question is what will happen to scrap prices.

Investments to be put on hold, no panic purchases despite EU mills’ price hikes

Investments will be put on hold given the high levels of uncertainty all around. EU mills have reacted with price increases but, as the market is still waking up after the winter season, this has not resulted in panic purchases.

Imports into EU risky amid lack of regulatory clarity

Brussels’ incompetence or unwillingness to announce final CBAM regulations and how safeguard measures will be continued after June 2026 makes imports into the EU extremely risky.

Turkish mills face slow local and export demand, adjust capacity usage accordingly

In Turkey, construction activity is slow and exports are down by 20 percent compared to the same period last year. Mills are adjusting their production based on the demand they receive.

US Supreme Court gives some breathing space to importers, but new tariffs likely

The Supreme Court decision in the US against Trump’s tariffs gives a partial breather to importers. However, it will probably not be long before new tariffs will be implemented under different names.

Current market status unstable, outlook unpredictable

It is very difficult to talk about competition under the current levels of protectionism, geopolitical issues and uncertainty in the market. Under the current overall market circumstances, the current status of the market can be described as unstable with an unpredictable and unstable outlook.

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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 rate of export duty for billet in Iran has declined to 2 percent from 11 percent valid previously, as the current export prices for ex-Iran steel billet are higher by nine percentage points than levels fixed in December 2021,  which have been taken as the base price. Meanwhile, the export duties for reinforcing bar is temporarily absent. It is noteworthy that the rates of export duty are not fixed, however are in direct connection with the gap between the current prices and prices fixed in December 2021.

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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“The President is issuing an executive order authorizing the imposition of additional sanctions against any individual owning, operating, trading with, or assisting sectors of the Iranian economy including construction, manufacturing, textiles, and mining,” US Treasury Secretary Steve Mnuchin told reporters at the White House. Mnuchin added that the sanction will be in effect “until Iran stops its terrorist activities and commit to never having a nuclear weapon.”

U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) took action against eight senior Iranian regime officials and  designated 17 Iranian metals producers and mining companies; a network of three China- and Seychelles-based entities; and a vessel involved in the purchase, sale, and transfer of Iranian metals products, as well as in the provision of critical metals production components to Iranian metal producers.

Today’s action targets the 13 largest steel and iron manufacturers in Iran. OFAC is designating Mobarakeh Steel Company, Saba Steel, Hormozgan Steel Company, Esfahan Steel Company, Oxin Steel Company, Khorasan Steel Company, South Kaveh Steel Company, Iran Alloy Steel Company, Golgohar Mining and Industrial Company, Chadormalu Mining and Industrial Company, Arfa Iron and Steel Company, Khouzestan Steel Company, and Iranian Ghadir Iron & Steel Co pursuant to E.O. 13871 for operating in the iron, steel, aluminum, or copper sectors of Iran.

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 outlook for the global long steel products market differs for the scrap industry, the steel producing industry and for steel consumers. The market can be described as generally unstable as there is still a lot of uncertainty and even a tweet may turn a lot of things upside down. We are going through a tough period particularly for BOF-based producers, especially due to increasing raw material costs. There have already been closures and threats of potential closures of several BOFs in Brazil, the
US, Scotland, China, and perhaps even elsewhere. A similar tough period was observed back in 2016, but it was not long-lasting. It seems as if the only way out is to slow down and stop inefficient facilities.

Fundamentals unlikely to support higher scrap prices, supply and demand balanced for billet

Ferrous scrap prices are also picking up, but are not expected to stay where they are now since the fundamentals do not support higher levels. Pig iron prices have seen a downward adjustment to match low residual scrap, which has not made any real gains. Overall, in the market there is an excess supply of slabs, while for billets supply and demand are balanced.

Supply increases in US amid unchanged demand

Demand in the US market for long steel products has not changed, but supply, especially from domestic mills, seems to be
increasing, thus putting pressure on prices. Domestic mills face very little pressure from imports, but, ironically, they are racing against each other to offer deals to even small buyers. On the other hand, US mills are trying to increase their HRC prices, which were unusually low. Of course, the main factor must be the closure of US Steel’s blast furnace-based mills, which have had a hard time competing while using very expensive iron ore.

Canada soon to be number one exporter to US, Mexico more cautious

Canadian mills are now offering to the US with zero duty and will soon gain their number one position as the largest exporter to the US. Mexico has made inroads in the US market, but is cautious as it seeks to avoid further antidumping action on its main products.

Very low demand in South America due to lack of infrastructure investment

The situation in the South American market is pretty much the same as last month. There was a small growth in reinforcing bar consumption in the first five months of this year, but general demand is still very low due to the lack of infrastructure investment. The rebar price level is low when one considers that the iron ore price has hit $117/mt CFR. Integrated mills have no margin to export. The only business opportunities are within Latin America, where the freight cost is less expensive.

Turkish mills’ export opportunities are limited

The EU quotas are almost used up for long steel product exports from Turkey, meaning there will not be any more Turkish sales to the EU market for a year. As a result, the supply-and-demand balance will not be in better shape than it is today for the Turkish mills.

EU market unusually quiet, domestic mills protect their margins, EUROFER not happy

The EU market is very quiet, which is very unusual for this time of the year. EU mills have been trying to move prices upwards but in vain. However, they have not been forced to reduce prices in line with developments in the scrap market and, as a result, have very good profit margins. However, EUROFER is complaining that the EU steel industry is suffering and is thus asking for further measures, which will probably make things even worse for the market. Under such circumstances, it will be very difficult to commit to any international transactions. Subsequently, manufacturing in Europe will even be harder due ot the lack of visibility, which eventually will cause considerable damage to downstream industry. Such actions by the EU have already started eroding common values, i.e., open markets, free trade, etc. EU member states may soon start accusing each other due to the inevitable consequences.

HRC prices in US prove that protectionism is not the solution

It has already been proved that protectionism is not the solution, as prices of HRC in the US are lower than in many other markets nowadays. Free and fair market rules have to be followed. There are already other ways and means to fight unfair trade practices.

No resolution in sight in US disputes with China and Iran

We still have no resolution to the US-China trade war. China is not giving in and the US has no reason to do so. Iran as an important steel producer and there is also no resolution in sight in its case. While there has been some positive sentiment after the G20 summit in Osaka, there is not much confidence because of past behaviours and sudden changes in the political arena.

Iron ore prices soar 18 percent in June, causing cuts in BOF outputs, shift to EAFs

Iron ore pricing soared by 18 percent in June on the back of strong demand and supply disruptions. Some idling of blast furnace production will mean production shifting toward scrap-based electric arc furnaces, which are extending their order books. The production cuts announced by many BOFs in the market will help bring balance to supply and demand.

Exports remain under control in China which shows increased demand for billet imports

Internal consumption in China has so far continued to keep exports under control. Any real or prolonged downturn in China will certainly change the direction of the iron ore market trend. Demand for billet imports is increasing in the Chinese market due to the high domestic production costs. The risk of China exporting steel products is absent, which helps support a balance between supply and demand. On the contrary, China is becoming a destination for semi-finished products. Going forward, we can expect continued investment in the electric arc furnace route in China.

Intense competition within regions, few markets left for exporters

Competition in regional markets is intense, but there is much less competition from deep sea sources due to protectionism. The lack of consumption pushes competition higher. There are very few markets left for exporters.

Demand in Western markets foreseen to remain slow

Demand in Western markets is expected to stay slow for the short term, but we might expect the markets to firm up during the last quarter of this year due to production costs and the anticipated slowdown in production.

Summer demand for scrap expected to be decent, with cheap prices compared to iron ore

As for raw materials, the summer will likely see some decent demand for scrap, which will mean stable pricing. The iron ore to scrap ratio is at a low point. In this respect, scrap looks cheap. The summer period in the European market will draw down scrap availability.

Foggy outlook for next quarter in an unstable market

The activity in the global long steel products market is expected to be slower than usual during the summer. In general, the market is unstable and the outlook for the next quarter is foggy.

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