At the opening of the SteelOrbis 2016 Spring Conference & 74th IREPAS Meeting held in Lisbon on April 10-12, Kim Marti, the international sales director of Spanish steel producer Celsa, handed over his duties as chairman of IREPAS, the global association of producers and exporters of long steel products, to Murat Cebecioglu, export manager of Turkish steelmaker ICDAS.

During his first speech as IREPAS chairman, Murat Cebecioglu stated that global economic problems continue to challenge sustainable growth in many areas of the world. “We can say that steel industry has been responding very successfully to the challenges caused by the current economic situation. Recent developments have changed the outlook and boosted prices,” the new chairman remarked.

Speaking at the event, outgoing chairman Mr. Marti said that things have changed in the last few weeks in the steel industry, with the industry seeing a big turnaround and heading for a healthier new balance. Mr Marti mentioned that in 2015 the steel industry reached the end of a major growth cycle which was based on the rapid economic development of China. He pointed out that the industry is at or has even passed the lowest part of the cycle, and that the time it will take to get back to a more reasonable business environment will depend exclusively on how quick restructuring actions are taken.

Mr. Marti indicated that the slowdown in demand in China has been remarkable, pushing down prices of steel and iron and prompting Chinese mills to target increased overseas sales, boosting trade tensions and causing the financial performance of many producers around the world to sink to unacceptable levels. He added that, seeing what was happening in China, global steel producers reduced output in 2015 to adapt to the new demand levels. The reduction in production resulted in a decrease in utilization rates, far below profitable levels which would be at 80 percent.

On the last day of the conference, producers of long steel products and steel billet, 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: Scrap prices have bottomed out soon after Rome meeting

Jens Björkman, the chairman of the IREPAS raw material suppliers committee, said that the markets are looking a little bit better this time, adding that the general feeling among committee members is that the current conditions are a lot more sustainable and that the environment has improved a lot for business in general. He pointed out that raw material prices bottomed out soon after the last IREPAS meeting held in Rome back in October 2015.

Mr. Björkman indicated that the business environment for raw materials is healthier now due to the weaker US dollar, which has hit its lowest level in 17 months, and the Chinese government’s decision to cut capacity. The raw material committee chairman stated that the lower volume of billet exports from China gave way to increased scrap purchasing in the markets, resulting in a healthier balance between billet and scrap volumes.

According to the committee chairman, protectionism is also an important factor contributing to stronger scrap demand, adding that US domestic demand for steel products has pushed scrap prices up. Commenting on India’s minimum import price system, Mr. Björkman said that the implementation of this measure has increased scrap shipments to India and he expects that the minimum import price will be extended for another six months. He also said that the committee does not expect any sudden change in the €10/ton scrap export duty in Ukraine.

In response to a question on whether the major iron ore suppliers are trying to push the small ones out by lowering prices so that they will be able to increase their prices at will once the smaller producers are out of the way, Mr. Björkman said that the major producers are trying to keep their prices low due to their shareholders who expect higher dividends.

Traders : Iran is proving to be an exporter, not an importer as had been expected

F.D. Baysal from Seba International, representing the IREPAS traders committee, said that looking at the price environment today the traders committee believes that steel mills will likely increase their outputs, instead of reducing them.

Commenting on the Chinese government’s announcement of a 100-150 million tons reduction in steel production not capacities, Mr. Baysal said that this will not be sufficient to have any impact on the export capacity the Chinese have at hand. He went on to say that, considering the expected decline in Chinese steel consumption to 595 million tons by 2025, the planned capacity reduction of 100 million tons will have zero effect on export capacity. He also explained that what China is doing is just replacing old-fashioned mills including the ones using using coal with new ones like Baosteel is doing with its new 9 million tons per year plant, and so they will provide tougher competition with their new state-of-the-art mills.

Regarding the lifting of sanctions against Iran, Mr. Baysal said that they had thought Iran would be a good alternative market for sales, whereas Iran is instead proving to be an exporter, selling billet to the Turkish market. He added that he believed there will be more exports coming from Iran.

Lastly, he said that it is not a good time to grant market economy status to China, not yet. Although he considers that the granting of market economy status will create a level playing field for everyone, which is a good thing.  He cautioned that it will be tougher to impose these high rates of antidumping duty for Chinese producers under Market Economy.

Steel producers : Exciting times finally here after depressing period

Murat Cebecioglu, chairman of IREPAS and also of the producers committee, said that producers are finally observing exciting times for the steel industry after a depressing period and have started to see the light at the end of the tunnel.

The IREPAS producers’ committee chairman stated that the increase in Chinese billet prices and higher iron ore prices have given a boost to the markets in general. This upward movement has been backed by most of the traditional markets and domestic prices in these markets have increased as well. Commenting on the different regions, Mr. Cebecioglu said that the EU is expected to see moderate growth in 2016 with the construction industry growing at a better pace than in 2015; however, the economy does not allow it to grow at a much faster pace. Looking at the Gulf region, he said that the demand outlook remains positive with Expo 2020 in Dubai and the World Cup 2022 in Qatar.

According to Mr. Cebecioglu, 2015 was not a good year for Ukraine, while 2016 is expected to be on the positive side. Regarding Russia, he said that the country’s economy shrank considerably in 2015 and is not expected to grow much in 2016 either. On the other hand, all indicators are showing positive signs for Turkish exports and steel consumption in Turkey will be decent with many ongoing and planned infrastructure projects.

April 11th, Monday
09:00 – 09:30                 Welcome address by Chairman of IREPAS

09:30 – 11:00                   SESSION ONE

- Global steel market outlook

Eric Louvert - BNP Paribas, Senior Advisor in Metals and Mining

• Cost competitiveness in a low raw materials and energy prices environment
• Chinese exports and trade barriers
• Outlook for demand

- Global economic developments and expectations

Lutz Karpowitz - Commerzbank AG , Director of FX Strategy

11:00 – 11:30 Networking Break

11:30 – 12:30                      SESSION TWO – Critical changes expected in global long steel markets

- Long products market outlook

Kim Marti - Celsa Group, International Sales Director

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

-  US market trends and trade cases

Bernd Neuenkirchen – C&F International, VP Wire Rods

-  Focus on China: What we can expect next?

Li Xinchuang, China Iron and Steel Association (CISA) /  Vice Secretary General and President of China Metallurgical Industry Planning and Research Institute (MPI)

• Outlook for Chinese steel market – raw materials and long products
• Overcapacity and environmental pollution
• Will Chinese steel exports still increase despite trade cases?
• New normal for Chinese steel

12:30 – 14:30 Networking Lunch

14:30 – 17:00 IREPAS Committee Meetings

• 14:30 – 17:00 IREPAS Producers Committee (by invitation only)
• 14:30 – 17:00 IREPAS Raw Material Suppliers Committee (by invitation only)
• 14:30 – 17:00 IREPAS Traders Committee (open to all attendees)

20:00 – 23:00 Gala Dinner (at Zambeze Restaurant)

April 12th, Tuesday
09:30 – 11:00                   SESSION THREE – Panel with Committee Chairmen

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

All required information can be found here.