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.

DO YOU AGREE OR DISAGREE?  

PLEASE LEAVE A COMMENT AND SHARE YOUR OPINION WITH US

There were 143 representatives from 49 different producers among the 502 registered delegates from a total of 58 different countries. There were also 97 registrations representing 50 different raw material suppliers.

At the opening of the conference, Murat Cebecioglu, chairman of IREPAS, said that the global long steel products market is currently overwhelmed by a spiral of duties and trade measures and protectionism such as has never been experienced before. He stated that the recently created uncertainties in the market on top of the already existing problems, the markets are now somewhat lost.

The IREPAS chairman added that the current environment is not bright and the level of competition in the global market is very strong, being almost at maximum levels.

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: Challenging year ahead, market will be much slower in H2

Jens Björkman, the chairman of the raw material suppliers committee, noted that the EU steel industry has started the year quite well, though steel production in the region was low in the first quarter. He highlighted that the new German government is expected to ease the pressure from the uncertainties on the market, which may boost steel production. Noting that the green transition in the EU seems to be postponed, indicating that there seems to be no viable transition until at least 2030, he stated that a lot of mills in the EU will start shifting from the blast furnace route to the electric arc furnace route in the next five to 10 years and there will be uneven demand for scrap until that time. Addressing the scrap export restriction plans in the EU, he stated that, as scrap demand is low in the region now, any restrictions would put pressure on the steel industry but may also lead to more bureaucratized trade between scrap generators and steelmakers.

Regarding the Trump administration’s tariff actions, the chairman of the raw material suppliers committee stated that, in the first few months this year, sales to the US were at enormous levels as a new tariff was anticipated. Noting that EU-based mills were running at high capacity to export to the US before the implementation of new measures, he said he believes that the market will be much slower in the second half of this year. He added that Trump’s second term will be much different than his first term. In addition, he expressed the belief that, despite the actions taken by the US, Canada and Mexico will not impose tax on steel exports to the US as the US is their biggest trade partner and a restriction would hurt their own industries.

Björkman stated that iron ore prices have been fluctuating at around $100/mt CFR, compared to $89/mt CFR seen in September 2024, due to higher production at the end of last year and early this year. He noted that, if China lowers steel production and the general output of iron ore increases, these two factors together will result in lower iron ore prices.

Traders at IREPAS: No reduction in US tariffs expected, trade conditions remain challenging

F. D. Baysal, the chairman of the traders committee, stated that, although the US imposing new 25 percent tariffs on imports from the countries previously exempted from the Section 232 measures seems like an advantage for the countries such as Egypt and Turkey which were already subject to 25 percent tariffs, only 18 percent of total imports into the US was from the Section 232-paying countries and 82 percent was from the exempted countries. He added that, despite the advantages some countries will gain, there will be no improvement in the market conditions given the economic uncertainties and the general market slowdown. Also, he said he believes that there will be no reduction in the US tariffs.

Looking at the EU, he said there have been some reductions in the import quota volumes, resulting in more challenging trade conditions. Considering the increased sales of wire rod and HRC over the past quarter from the ASEAN region to the EU, Mr. Baysal noted that, even though there are some restrictions on certain ASEAN countries, the EU is now more open to those countries compared to its old traditional markets given the free trade agreements between the EU and some Southeast Asian countries.

Mr Baysal added that he foresees no reduction in China’s exports and capacity utilization going forward.

Producers at IREPAS: Markets in unknown territory because of tariffs

Murat Cebecioğlu, chairman of IREPAS and also chairman of the producers committee, pointed out that the hot topic during the producers committee meeting was tariffs and their effect on business, adding that this is completely unknown territory and that nobody has any idea where things are headed at the moment, which makes it very difficult to conduct business.

He said that, as the Chinese domestic market is not doing so well, China will still be the main factor depressing prices as it is heavily dependent on exports and its prices are quite low compared to those of other exporters. He went on to say that the stimulus package is not helping much at the moment to boost to market, which is why China is selling billet to countries like Turkey and many other countries.

The IREPAS chairman noted that, as billet is a competitive alternative to scrap in terms of price, particularly Turkish mills will keep buying billet, adding that, as long as prices are at the current levels buying billets is much more profitable, even though the lead times from Asia are two to three times longer.

Commenting on the GCC shifting from being an importer to being an exporter, Mr. Cebecioğlu said that the reason they are exporting is that they have overcapacity, and are selling to the EU, especially Germany, and to North Africa and Israel. He indicated that the answer to the question on whether their exports will continue depends on how infrastructure projects will take shape in the region in the coming period and how much of that demand the local market can absorb: otherwise, they will continue to export.

The restricted products include reinforcing bars, wire rods and flat steel products, as well as steel pipes and fittings, profiles, iron and steel construction materials, iron-steel wire, cement, aviation and jet fuel and metal processing machinery. It was reported that the measure will remain in effect until Israel declares a ceasefire in Gaza and allows an uninterrupted flow of humanitarian aid to the Gaza Strip.

Meanwhile, in the January-February period this year, Turkey exported 49,990 mt of rebar and 11,387 mt wire rod to Israel. In the given period, Israel was Turkey’s second and fourth main market for reinforcing bar and wire rod exports, respectively.

It seems like everybody in the global long steel products is waiting for some really positive developments to materialize. However, unfortunately, there is no substantive positive news coming out of China. Nevertheless, the country is driving iron ore prices and coal prices, while many long product mills are working to keep margins between scrap and finished products on the plus side. Meanwhile, China is reporting that rebar produced by both EAF-based and BF-based producers in the country are being transacted without positive margins.

Longs demand in EU hit by variety of negative factors

EU import quotas for wire rod were oversubscribed by early January. Overall, demand was down by 17 percent for reinforcing bars and down 10 percent for wire rods in Europe, but Germany was affected the worst. The reasons are, of course, high interest rates, higher costs and the increase of bureaucracy due to environmental regulations by Brussels and local governments. EU mills’ prices have increased slightly due to costs. Going forward, a lot of wire rod and reinforcing bar shipments are expected from North Africa and Turkey.

Turkey’s longs exports to Israel under threat, new safeguard impacts wire rod imports

The political dispute between Israel and Turkey may affect Turkish mills’ biggest export market. The recently announced safeguard measure against wire rod imports in Turkey has practically closed opportunities for wire rod imports since the import duty is quite high for the regularly purchased origins, while the quotas will be viable businesswise only for supplies from some countries. It is highly likely that imports from Egypt and Malaysia will now be excluded from the Turkish market. Russian exports will also be halted unless the Russian mills agree to absorb the $175/mt tax.

Positive sentiment prevails in US longs market

Demand in the US has not changed much. However, as interest rates are coming down, sentiment in the markets is upbeat. The mood is positive in particular in residential  construction. As for imports, there are only two countries, Egypt and Algeria, that are exporting some volumes to the US. The long-standing traditional exporter, Turkey, is not  competitive anymore due to very high antidumping rates.

Longs producers in US happy with prices and volumes

The US is certainly an outlier, spreading higher prices to Canada and Mexico.  The margins between prices of scrap and sheet are euphoric, while no long product producer in the US can complain about selling prices and less-than-decent volumes.

Interest rate cuts, if enacted, could give boost

Inflation seems to be going down in the US and the EU. If central banks start reducing interest rates, it may give a serious boost to economies once again.

Fears of recession and geopolitical uncertainties add to negativity

Other than the abovementioned factors, there are not many positives in the market due to the seasonal slowdown in most of the world and recessions in many countries as well  as political uncertainties. There are two full-scale wars going on and Red Sea interruptions have now added to the cost of shipping, making business even harder. Generally,  there is a high risk of markets becoming even more local due to trade route disruptions such as those in the Red Sea and also in the Panama Canal.

Competition becomes more and more local

Competition in the market is becoming more and more local. Most would say it is difficult to compete as you start with a loss and stay with a loss if you transact any new kind of business. Some close-by repetitive business keeps most mills afloat.

Market status mostly stable but low, outlook is challenging

Under these circumstances, the current status of the market can be described as mostly stable but on the low side, while the outlook is challenging and slow.

DO YOU AGREE OR DISAGREE?  

PLEASE LEAVE A COMMENT AND SHARE YOUR OPINION WITH US 

The supply and demand situation in the global long steel products market is not getting any better, which continues to put pressure on producers. The increasing political influence on trade flows and particular markets in the form of antidumping and/or countervailing duties including also supply chain restrictions are leading to a more and more regionalized trade with a fairly unhealthy supply and demand balance.

Market unlikely to improve as China keeps exporting and holiday season approaches

As long as China keeps exporting over 6 million metric tons of steel products per month, it appears highly unlikely much improvement will be seen in the market. We are also approaching the end of the year, in other words, the holiday season, which is another factor that will contribute to a slowdown in the markets.

Turkish exports hit by war in Israel, Yemen’s involvement and poor EU demand

The recent situation in Israel and now Yemen’s possible involvement will have a big impact on Turkish reinforcing bar exports. On the other hand, EU demand is not improving and does not offer much hope to Turkish mills in the near future. Capacity utilization among Turkish long product producers is around 50 percent

Some price improvement in EU, but demand remains weak

In the EU, prices have recovered from the lows of the summer due to the shortage of stocks. Going forward, demand remains weak, but mills’ offers are defined by rising scrap and energy costs.

Demand for long products slows down in the US, where as flats are strongly up after end of UAW strike

In the US, demand seems to be slowing down for long products as most buyers are reluctant to purchase material that will arrive at the end of the year, in order to avoid year-end taxes. The US domestic market has seen some good news with UAW and auto producers more or less agreeing terms and returning to business and unprecedented gains on flat products. The end of the UAW strike was one of the reasons of the significant increase in HRC prices seen.

Imports are on the decrease and mostly coming from two neighboring countries subject to zero Section 232 duty, making business more regional, like in Europe. There are more protectionist measures being discussed, with the ineffectiveness of the WTO helping to make globalization history.

Scrap generation in Europe on low side

Slow economic development in Europe has slowed the availability of scrap. The recycling business has been struggling to generate sustainable volumes. There is low demand from the European steel sector and yet lower scrap generation. North American scrap is exported at comparatively lower prices than US domestic prices, at up to US$50-75/mt lower depending on the calculation. However, the volumes for many of the export markets are heavily reduced.

Sanctions against Russia likely to be tightened, US and EU to maintain trade remedies

The sanctions against Russia will be tightened. It looks like the US and the EU will maintain their trade remedies despite the WTO rules. They are even discussing further action against China.

China’s demand keeps raw material prices at relatively high levels

Strong demand for iron ore from China has been pushing up scrap prices, which have thus been maintained at higher-than-expected levels. It is hard for steel mills to decrease prices when raw materials are relatively expensive. China, on the other hand, has started raising its export prices, but whether the prices will hold is questionable.

Market status unstable for some regions, stable at low level for others

Under these circumstances, the current status of the market can be described as unstable for some regions and stable but at a low level for others.

Outlook for next quarter pessimistic or quiet and sideways at best

It looks like all the engines are slowing down, but inflation is also coming down. The outlook for the next quarter is pessimistic or quiet and sideways at best, but we may look for better times in the second quarter of 2024.

DO YOU AGREE OR DISAGREE?  

PLEASE LEAVE A COMMENT AND SHARE YOUR OPINION WITH US 

Overall, the global long steel products market still looks positive, supported by strong demand, even though business has become more difficult due to higher logistical costs and time delays in getting goods from one place to another. Exporters are all under pressure due to the increase in freight costs. Container shipments are also very problematic. The only steel moving long distances seems to be Turkish steel and Asian flat rolled and coated products, which are heading everywhere.

Strength of demand remains a major supporting factor as economies rebound

Some regions and countries continue to enjoy strong demand, in particular, Europe, the US, Canada, the UK and Israel. Mills in these locations remain sold out far into the future. Steel is only a small part of the demand shock caused by economies rebounding, unprecedented stimulus packages, and logistic and supply chain disruptions. The steel supply side is catching up at a slow pace and supply shortages still continue to be seen across the Western world, especially in the US. It looks like this extra demand may continue at least until the end of the current year.

EU safeguard measures and Russian export duty to provide huge support for prices

The extension of EU safeguard measures is another issue that will have an impact on prices, in addition to the export tax on Russian goods. Russia’s imposition of a 15 percent export tariff may further restrict supply to the international market. The impact of the new export tariff in Russia remains to be seen. Most Russian mills are booked out for the next couple of months, allowing them to be in no rush to sell, and so they are keeping their prices more or less steady. The market seems to absorb the thought that producers in Russia will absorb all of the new export duty. All these factors provide huge support for prices.

Global steel output continues to rise, China upbeat after July 1 CPC anniversary

Worldwide production, including China, rose by 15 percent in the first four months this year, which may put pressure on prices. After the Communist Party of China celebrated its 100th anniversary on July 1, China came back in a positive mood.

Rebar demand in Turkey hit by high interest rates and inflation

Turkey is still struggling with high interest rates and inflation, which have put pressure on rebar demand. Although Turkey’s export volumes in the first half were up by 16 percent, this was not enough to bring domestic producers into the comfort zone.

Demand hits record-high levels in Europe, but steel users left in dire straits

Demand in Europe is still very strong and prices for deformed bars, wire rods and mesh have been reaching all-time high levels. The unchanged extension of the EU safeguard measures for another three years was certainly unexpected.

The EU has followed the example of the US which still has its Section 232 restrictions in place. The downstream industry in Europe was not able to find much support in Brussels, which has decided that the threat of trade deflection is still too high for Europe. It is now hoped that once the US changes its legislation, the EU will follow as well.

On the other hand, not only are prices a huge problem for the industry, but also more and more the reliable availability of steel is a big issue. Demand is still high but users are still suffering from supply problems and the new quota for rebar imports into the EU was almost completely consumed within the first week of the new quota period.

Extremely high freight rates contribute to regionalization of trade

Freight rates are extremely high for all forms of transport, which makes long distances difficult for ferrous scrap as well. Strong intra-European demand for scrap and steel as well as historically high scrap-to-steel spreads has continued to regionalize trading. It has also driven up the price of shredded as compared to HMS in the international markets. Demand levels remain elevated into the autumn, which will likely mean a continuation of stronger consumption in Europe than normal. Ahead of August, we may even see a negative impact in Russia as exporters scramble to move material to ports.

Life getting back to normal in northern hemisphere, high consumption levels seen globally

Summer has begun in the northern hemisphere and life is getting back to normal. Inflationary pressures seems to have lost some momentum after a period of strong producer prices. All markets worldwide are running well on high consumption levels, and there is still not sufficient material available to complete restocking.

Spreads between scrap and steel remain very strong

Iron ore prices are in a trading range of $210-225/mt.  Ferrous obsolete scrap is abundant. New production material and shredded scrap remains in very high demand in Europe and the US, with strong spreads over obsolete scrap. There are unprecedented spreads between shredded scrap and HRC. Long product spreads are significantly less, but are still twice as high as what a normal market might enjoy. The good times continue for steel producers, while consumers continue to sit at the table and eat whatever is served to them.

Main competition between steel consumers, not producers

Competition on the supply side is very reasonable. Price competition is between Turkey, India, Vietnam and China. Nowadays, the competition is between steel consumers and not steel producers.

Market situation generally positive and likely to remain so next year also

The market seems to be quite stable with a very satisfactory outlook. Overall, the market situation still looks positive and it seems it will continue positively next year as well.

DO YOU AGREE OR DISAGREE?

PLEASE LEAVE A COMMENT AND SHARE YOUR OPINION WITH US

There is still a surplus of supply and not enough demand in the global long steel products market. The profitability and margins of steel producers vary greatly between regions amid several factors such as the coronavirus outbreak and/or geopolitical issues like recent announcements relating to Israel/Palestine and Libya creating uncertainties for the future.

Full impact of coronavirus in China difficult to predict

Chinese steel production hit 996 million metric tons in 2019, which is 7.4 percent above the previous year, but exports are under control and were “only” 64 million metric tons, around five million metric tons below 2018. Spring is around the corner and China is expected to warm up after the Lunar New Year Holidays. Obviously, nobody is able to make forecasts about stoppages that may result from the coronavirus issue. The effects of the virus may be with us for a month of the Chinese lunar year. China may not be the big steady buyer that most of us in the market thought it was.

Supply increases in US market but its prices are the highest

Demand in the US market is still the same, but supply did expand with the increase of domestic production and more imports from Section 232-exempt countries. Currently, steel product prices are highest in the US, followed next by China, and with the EU in third place but for consumers of significant volumes.

Difficult 2019 for Brazil

Brazil’s steel market had a difficult year in 2019. Apparent consumption in its internal market was 20.6 million metric tons, down 2.7 percent from the previous year. Crude steel production in Brazil in 2019 came to 32.2 million metric tons, declining by 9.0 percent from 2018. Imports totaled 2.4 million metric tons, similar to 2018. Brazilian steel exports in 2019 decreased by 8.1 percent to 12.8 million metric tons due to certain antidumping and countervailing duties in main markets.

Some recovery expected in Brazilian construction sector in 2020

Brazilian slab suppliers are also facing difficulties in exporting to the US because the first quarter quota under Section 232 for semi-finished products was filled on the first day of the year. The Central Bank of Brazil estimates 1.2 percent GDP growth for 2019 and forecasts 2.2 percent growth for 2020. Having said all that, some recovery in the Brazilian construction sector is expected for this year.

EU makes quiet start to year, improvement foreseen compared to H2 2019

The EU market has made a very quiet start to the year, but at the same time everybody is forecasting a better situation compared to the second half 2019. The overcapacities in the EU still prevent prices from going up, even though imports are low as never before since most quotas have been used up and will only again become available from July 1. Importers consider the risk of importing under the “all others” quota to be too big because of the 30 percent restriction on country basis.

Demand varies across EU countries

Some EU countries have robust and good demand, while others do not. Those mills located in the countries with low demand are trying to shift as much as they can to the countries with high demand, which puts downward pressure on domestic mills’ prices. The situation in the EU market is expected to improve in the coming weeks following movements in scrap prices.

Low scrap-to-rebar price spread in Turkey in January, rebar demand still weak

The price spread – scrap to rebar price – of Turkish mills in January this year was the lowest observed since January 2019. In fact, the spread was lower only in January 2017 compared to January 2019. It looks like Turkish producers are trying to widen this spread using all of their muscle. For now, exerting downward pressure on scrap prices seems to be easier than requesting higher sales prices. In the meantime, Turkish mills have implemented more production cuts, which will of course support prices. However, the real issue is demand, which has not yet shown any signs of picking up. Therefore, margins remain low.

Scrap prices going down everywhere despite efforts to the contrary

Scrap prices are going down after attempts to manipulate them. The prices of scrap have been going down even in Asia where China is the driver of the scrap price trend. The European scrap dealers were first to drop prices to Turkey. Such decreases in scrap prices are putting even more pressure on long product prices in Turkey.

Iron ore prices likely to remain high in relation to scrap

Iron ore prices, on the other hand, are still high in relation to scrap and look like they will remain stable at around $80/mt CFR FO China main ports.

Attempts to stimulate growth in various parts of world

In general, the evolution of demand is still positive globally, while the development of the automotive and industrial markets evolution may help to support construction products. There are attempts to stimulate growth in various parts of the world. Moreover, inventory levels at present are moderate.

Positive signs from China, EU and Turkey, warm winter also helps

It is also a big positive to see Chinese steel exports under control. Furthermore, it looks like prices in the EU are slowly recovering and margins for producers are improving. Turkish producers are also trying to increase the spread, which helps the market positively, too. Last but not the least, construction activity has been continuing in the northern hemisphere due to the warm winter and there have been hardly any stoppages.

Coronavirus impacts regional demand, tensions in Middle East also a major concern

On the other hand, the coronavirus situation is a serious concern, reducing demand in China and surrounding regions, thus creating oversupply of steel in the world market. The US presidential impeachment trial and the tensions in the Middle East are also major concerns.

Very high levels of competition in most markets

Competition levels are very high in most markets and may even increase further in the second half of this year, particularly regionally. Competition is only weakening in global trade due to politically-motivated trade actions.

Markets mostly unstable but outlook generally satisfactory except for America

While the current status of the market is considered to be mostly unstable, the outlook is generally satisfactory with the exception of the American market where uncertainties contribute to an unsatisfactory environment.

DO YOU AGREE OR DISAGREE?

PLEASE LEAVE A COMMENT AND SHARE YOUR OPINION WITH US

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.

At the opening of the conference Murat Cebecioglu, chairman of IREPAS, said that IREPAS firmly believes in, has supported and will always continue to support free and fair trade in steel but is very concerned by the recent developments triggered by the unilateral US tariffs, which are unjustified and against the World Trade Organisation rules and principles.

The IREPAS chairman stated that, in spite of all such protectionist measures, the global long steel products market is currently in a positive mood amid good demand worldwide. He added that, had there not been protectionist actions like the additional tariffs, quotas or safeguard measures, the global business scenario would certainly be much better. Mr.Cebecioglu said that protectionism is like a virus, expanding and hurting the international trade environment.

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 : Two major events have impacted the market

Jens Björkman, chairman of the raw material suppliers committee, said that, since the previous IREPAS meeting held in September 2018 in Istanbul, two major events have impacted the raw materials market. The first of these events was the significant reduction in production by Turkish steel producers – the leading buyers of scrap in the world – and the corresponding reduction in their demand for scrap. Turkish mills’ scrap demand has stabilized somewhat since then but it still remains at low levels, a fact which scrap suppliers will have to get used to. Mr. Björkman said that most of the raw materials committee members believe that they will continue to see reductions in Turkish demand for scrap due to poor domestic market conditions in Turkey.

According to the committee chairman, the second major event that influenced the raw materials market was the iron ore waste dam collapse in Brazil, which has had a strong influence on iron ore prices. He added that iron ore prices increased by 20 percent within a short time and that prices have continued to move upwards. Mr. Björkman also touched upon some other factors affecting the raw materials market, namely, the low water levels on the Rhine which had made logistics extremely difficult and costly, leading to a slowdown in the accumulation of scrap at ports for export. He stated that the slowing down of the EU automotive sector in the last six months led to the lower availability of prime scrap for export.

The committee chairman said that there has been some buildup of scrap demand in areas such as Southeast Asia, South America and North Africa, which is balancing the reduced demand from Turkey though not entirely. Answering a question about the influence of the Section 232 tariffs on US scrap exports, Mr. Björkman said that in the past few months there have been some reductions in US scrap exports, partly because of lower import needs from Turkey and partly due to stronger demand in the US domestic market, adding that US domestic scrap demand is driving down the availability of scrap for exports.

Regarding steel production in the EU, he pointed out that it has declined somewhat in the first few months of the current year, while both demand for scrap in the EU and intra-EU trade have been active and strong.

Commenting on the financing of the scrap trade, Mr. Björkman said that, right after the currency crisis in Turkey, availability of letters of credit was tight in the country and financing costs for Turkish mills increased substantially, with the currency fluctuations making these issues much more challenging.

Traders at IREPAS: Safeguard measures have a major impact on trade

Representing the IREPAS traders committee, F.D. Baysal said that safeguard measures are having a major impact on steel trade. Referring to a question by his fellow traders, Mr Baysal commented on Turkey’s alternative markets and said that Africa will by no means replace the US and the EU as a destination for Turkish exports. Mr. Baysal said there are not a lot of places the extra supply in Turkey could go to and the only solution is reducing capacity utilization.

Answering a question regarding the potential for Iran’s billet exports, Mr. Baysal said that Iran is not likely to produce steel any cheaper than Turkey, Saudi Arabia or Algeria, while sanctions make it almost impossible to buy Iranian steel.

Mr. Baysal also stated that, while the Chinese government is taking serious measures and reducing production, Chinese suppliers will definitely not be absent from the global market but, as they are more contented in their domestic market, they will be less destructive in terms of pricing in the export markets. He added that the cut in VAT in China will help stimulate the economy.

Producers at IREPAS:  Importers have become exporters and vice versa

Mr Murat Cebecioglu, chairman of IREPAS and also of the IREPAS producers committee, said that GDP is growing in most countries worldwide although growth is slower than expected in some markets. Nevertheless, he added that things are getting better, which signals good demand. The IREPAS chairman said that protectionist measures are spreading like a virus throughout the world, changing trade flows.

He pointed out that importers have become exporters and vice versa. Mr. Cebecioglu stated that US President Trump totally destroyed the markets with tariffs and that others are following suit, starting a chain effect, increasing customers’ costs and ultimately causing economies to slow down.

Answering a question about the troubled Turkish exports, Mr. Cebecioglu said that the main export markets for Turkey have become Yemen and Israel, with the US and Canada being out of reach. However, the committee chairman reiterated that the Turkish steel industry has gone through difficult times before and will get through this one as well.

The global long steel products market is currently in a positive mood amid good demand worldwide. Had there not been protectionist actions like additional tariffs, quotas or safeguard measures, the global business scenario would be much better. Protectionism is like a virus, expanding and hurting the international trade environment as we knew it.

Canada and Mexico follow the US and also jump on the protectionist bandwagon

In the Americas, after the US, Canada has also got on the bandwagon though not with the same intensity, and now Mexico has announced that it will be reinstating the 15 percent duty on steel imports. Demand in all three countries is strong, but the benefit goes to domestic mills only.

Canada and Mexico expected to eventually sign USMCA agreement

It seems that Canada will be the first to sign the USMCA (the new NAFTA) agreement, if they agree to a quota to replace the tariffs. Politics in both the US and Canada could delay this: however, it appears that the earliest resolution could happen by late summer. Mexico’s signing of the agreement may be delayed months after the signing by Canada.

US and China appear to be moving closer to a trade deal

On the other hand, the negotiations between China and the US seem to be improving as we read reports saying that they are getting closer to a trade deal. Obviously, the markets in China and Asia are all awaiting news on the China vs US feud.

EU quotas boost domestic markets, strengthening dollar discourages imports

The recently implemented quotas in the EU are having a very positive effect on the EU producers’ capacity utilisation and increasing their margins significantly. In addition, with the US dollar gaining strength against the Euro, imports are even getting less and less attractive which further improves EU producers’ advantage in the market.

Exporters continue to suffer amid uncertainties in the global market

Both US and EU mills still enjoy good business in their respective domestic markets with margins like never before thanks to the tariffs and safeguard measures in place. However exporters continue to suffer due to the uncertainties in the global market. The market players who benefit from fair and free trade are suffering because of protectionism and the current political mood.

Demand for ferrous scrap has recovered since the start of the year

The European, US, Chinese markets are all performing well with strong domestic demand for steel which drives scrap demand. Accordingly, demand for ferrous scrap has returned since the beginning of the year. After seeing bottom levels in December, the long steel products market has started moving in an upward direction since January and is also supported by raw material prices.

Turkish long product steel mills continue to suffer

The global steel market is indeed characterized by a positive mood at the moment, but the Turkish long product mills are still struggling because of protectionism in the global market and the lack of domestic consumption.

Turkish suppliers face shrinking export opportunities

Not many markets are left in which Turkish exporters can conclude business, as both the US and Canadian markets are closed because of duties, and the new quota regime makes it difficult to do business in Europe. The GCC and Far Eastern markets are also out of reach to Turkish suppliers for the moment because of the price gap. The remaining target markets are Central and South America, North and South Africa, Israel and Yemen, but the volume that can be generated from all these countries is quite limited.

Steel mills’ margins still positive though not as good as last year

The good news is that most steel mills globally have positive margins despite all the ups and downs, even though the margins are not as good as last year. Also, despite the increase in iron ore prices, scrap prices have not moved up at the same rate.

Good domestic demand in China continues to keep Chinese exports in check

Chinese exports are still being held relatively in check thanks to good demand in the Chinese domestic market. No downward price trend is expected in the short run in China due to the additional state support for the market. Also, the outlook for a deal with the US will help to keep the Chinese economy on an increasing GDP trend. Expectations for China and the US to reach an agreement on trade tariffs toward the end of March have been driving the financial markets for some time.

Strong competition exists in the international markets not blocked by protectionism

Competition is limited and moderate in most markets due to protectionism, tariffs and quotas. The markets are having to adjust accordingly as the playground is smaller now. There is strong competition in those limited number of markets which are not closed to international market players by protectionism.

Outlook for global longs market still satisfactory despite ongoing instability

The current status of the global long steel products market is perceived as being mostly unstable due to the aforementioned reasons. Having said that and despite all the existing issues, the outlook is still satisfactory, even though it remains challenging.

DO YOU AGREE OR DISAGREE?

PLEASE LEAVE A COMMENT AND SHARE YOUR OPINION WITH US