Of the many deserving long-term contributors to the IREPAS community, several were awarded plaques at the gala dinner held at the 79th meeting in Istanbul, which marked the 35th anniversary of the foundation of IREPAS.

Raw material suppliers: Increasing Chinese exports will alter market balances

Ioannis Meimaroglou, chairman of the IREPAS raw material suppliers committee, stated that the increasing volume of exports from China due to the slowdown of Chinese domestic consumption is influencing the world market and will certainly change the existing steel trade balances. Mr. Meimaroglou said that the some members of the raw materials committee expressed the view that the threat of cheap Chinese steel exports is being used more as a pretext to exert downward pressure on raw material prices, while others stated that, if Chinese exports reach 100-120 million tons annually, the consequences will be serious, independently of whether these exports are directed to Turkey or to other countries.

Meimaroglou added that the increasing raw material demand in the market and particularly in the Arabian peninsula is creating a new situation in the region and can change the correlations on a more permanent and long-term basis. He went on to say that the considerable fall in iron ore prices has been increasing the pressure on scrap prices, adding that the strengthening of the US dollar is helping raw material suppliers for the time being, covering a part of the price fall.

Regarding scrap collection, Meimaroglu stated that the domestic markets in the US, Europe and Russia are very strong and healthy and so it is difficult to compete with them in order to collect material for export, leaving most scrap yards almost empty. He concluded by saying that the raw material market is likely to see further pressure on prices, drastically affecting suppliers’ quantities, while also adding that the direction of scrap flow may change in the future.

Traders see new possibilities for business with Iran, upbeat on Iraq and Ukraine

The traders committee chairman F.D. Baysal said that, despite the political instability in the Middle East, particularly in Iraq and Syria, shipments to Iraq are still continuing, though with some interruptions. He underlined that there are new possibilities for buying from and selling to Iran which is a new market to look forward to.

Regarding the tensions between Ukraine and Russia, Mr. Baysal stated that business is being carried on as usual, with minor interruptions which do not pose any major problems for traders. The trade flow in the region is observed to be continuing as before.

Commenting on different antidumping cases, Mr. Baysal remarked that, since Turkey is exempt from US rebar antidumping duties, rebar exports from Turkey to the US will continue, adding that the pricing may not change. He pointed out that, with China exiting the US market as a result of the wire rod antidumping duty investigation, there will be new countries entering the US market.

With regard to the increasing volumes of Chinese exports flooding the market, Baysal said that he has been always a supporter of free trade as long as it is also fair trade – speaking in response to market information that China is exporting to North Africa with 180-day credit terms, with insurance provided by a state-owned company.

Finally, commenting on raw material prices, the traders committee chairman said that iron ore prices have been declining and probably will decline further, forcing scrap prices to decline as well. Traders are looking forward to seeing lower prices, he affirmed.

Steel producers: Changing billet prices will lead to new market realities

The chairman of the steel producers committee, Kim Marti, who is also chairman of IREPAS, stated that Turkey is out of the billet market in addition to the interruptions to the business in Ukraine and that the market has been left to the Chinese mills. Mr. Marti added that the Chinese billet suppliers gaining ground in the region will put pressure on billet prices in the Mediterranean and Black Sea regions and also on scrap prices, since billets are used as a substitute for scrap. Mr. Marti, along with the other committee chairmen, agreed that certain measures should be imposed against Chinese exports.

Mr. Marti pointed out that the changing billet prices will take the industry to a new setup in the coming months, though also saying that the market adjusts quickly to new realities. Rebar demand will see a slight increase compared to 2013, Mr. Marti said, adding that the Turkish mills are happy with their domestic market and are looking forward to new trade routes opening up again to Iraq.

The producers committee chairman also said that, while the northern EU countries are performing well, the situation is less bright for southern EU countries. Italian, Spanish and Greek mills are still facing significant overcapacity under very slow market circumstances, finding the balance with exports to North Africa and production cuts. Mr.Marti added that they are starting to see signs of revival in consumption in Greece and Spain.

Commenting on the EU mills’ investments in environmental protection, Mr. Marti said that it is not something that the mills should abandon, while other committee chairmen agreed that environmental protection constitutes a social responsibility aspect of businesses and should be continued.

Ioannis Meimaroglu, chairman of the IREPAS raw material suppliers committee, underlined the record-high 44 registrations of representatives of a total of 32 different raw material supplier companies for this latest IREPAS meeting, and continued by stating that, in the first few months of the current year, scrap exports from the US and Europe have declined by as much as 30-40 percent year on year, partly due to the harsh winter conditions, but mostly due to the strong demand coming from domestic mills in the US. Meimaroglou quoted the US suppliers who mentioned that, even if scrap prices in the international market reach the level of $400/mt, it will still be difficult to compete with the current strength of the US domestic market. A similar situation was also outlined by European suppliers from Germany, Belgium and Sweden.

The substantial decrease in scrap exports from Romania – down to a monthly volume of just 72,000 mt compared to the previously normal monthly volume of 150,000 mt – came as a result of low scrap collection prices, stated the committee chairman, adding that scrap availability will continue at Rostov and other Azov Sea ports, especially after the opening of navigation on the rivers (around mid-April), but, of course, only if international market prices reach at least the same levels as prices from domestic factories.

The IREPAS raw materials suppliers committee chairman also said that Russian scrap exporters are now facing significant financing problems, as banks are taking serious measures after the events in Crimea and in eastern Ukraine in general. This may lead to new financing conditions for the suppliers and their clients, at least for a period of time until the normalization of relations between Russia and Ukraine, he remarked. “A new fact, underlined by some participants in the committee, is that scrap demand has now started to come from countries like Mexico and Egypt, which will further affect the availability of exports from the traditional suppliers,” Mr. Meimaroglu said.

Wilhelm Alff, the chairman of the IREPAS traders committee, evaluated the market situation stating that the supply-demand imbalance still exists and will continue in the short to medium term, despite quite low capacity utilization levels in Europe, especially in southern Europe. The traders remarked that in China, although some outdated capacities are being closed for environmental purposes, they are being replaced by larger and more advanced mills. Regarding the ongoing antidumping duty cases in the US in relation to Turkish and Mexican rebar, mixed opinions were expressed by traders, with no significant margin anticipated for Turkish rebar suppliers. Traders believe that protectionist practices will continue to be adopted.

Mr. Alff also mentioned that long steel product imports are expected to decline in the Algerian market with the commissioning of new capacities, including the new rebar mill of Turkish steel group Tosyali, which began production in June 2013. Lower long steel product demand in this country will affect Spanish and Italian rebar suppliers negatively, as Algeria is the main export market for southern European long steel mills.

Representing the IREPAS billet suppliers committee, Margarita Zvezda from Russian steel producer Evraz, stated that Ukraine and Russia – the largest steel billet suppliers – witnessed stable billet supplies in 2013, with Evraz permanently stopping a plate mill and thus having additional ~400,000 mt of steel for exports in the form of square billet, while Ural Steel shutting OHF production.

Ms. Zvezda remarked that Turkey, a long-standing net billet exporter, has become a net importer of steel billet last year, firstly because Turkish steel billet producers are mainly EAF-based and higher scrap prices harmed these producers’ cost-effectiveness, causing them to lose market share in export markets to CIS mills, which are mostly BOF-based and have cheaper iron ore supplies. Secondly, Turkish steel producers have preferred to import cheaper steel billets from the CIS instead of producing crude steel to cast steel billets. The IREPAS billet suppliers committee does not foresee any change in this situation in the mid-term, as some CIS billet suppliers are expected to continue sacrifice their margins in order to provide discounts to undercut Turkish steel billet prices.

Ms. Zvezda also stated that Iran had been a major player in the Middle Eastern steel billet market until international sanctions were imposed, adding that, if political issues are resolved, it will again become an important steel billet importer. However, she went on to say, this situation is not expected to last long, as Iran is close to becoming self-sufficient in terms of steel billet supplies after the commissioning of ongoing steel billet capacity projects.

As regards Egypt, Ms. Zvezda stated that Egypt has not experienced a genuine recovery in long steel consumption with significant overcapacity being in place, while a big portion of existing long steel demand is coming from illegal construction sites, a risky situation if the government decides to undertake measures, she said, going on to state that, with the commissioning of the steel billet plant project of Egyptian Steel, the country’s demand for steel billets is foreseen to decline.

Kim Marti, IREPAS chairman and chairman of the rebar and wire rod suppliers committee, said that long steel products demand in GCC countries is quite strong as usual, especially in Qatar. Local governments’ infrastructure spending, most importantly on housing, is providing support for higher demand. Stability is foreseen to continue in these countries which have solid budgets. However, he added, some new rebar capacities are coming on stream in the Middle East and some capacity expansions are also being carried out.

Mr. Marti stated that significant differences are seen between the north and south of Europe in terms of long steel product demand. In Germany, he said, residential construction is supporting long steel demand and in Poland EU funds worth €1.6 billion are expected to be spent mostly on infrastructure investments. Long steel demand in Spain and Portugal is not anticipated to decline further after the severe contraction in past years, though Italian long steel demand may decrease by a further 10 percent this year, Mr. Marti warned. Greece, surprisingly, is foreseen to witness some improvement in long steel demand, with some infrastructure investments.

After the municipal elections, the Turkish economy is expected to regain stability, the IREPAS chairman said, adding that Turkish rebar producers are not expecting high antidumping margins as a result of the ongoing trade case in the US against Turkish rebar.

To conclude, Mr. Marti stated that financial restrictions are limiting opportunities for rebar and wire rod producers, while providing some opportunities for traders.

Ioannis Meimaroglu, Chairman of the Raw Materials Suppliers’ Committee, confirmed that a record high number of 42 representatives attended the committee meeting in Istanbul. Meimaroglou stated that the raw material suppliers fully understand the difficulties steel producers are facing in selling finished products under prevailing market conditions, and their efforts to reduce their costs, including the costs of raw material. He went on to emphasize that scrap suppliers are indeed trying to reduce their scrap collection prices, while adding that they are facing some major issues. First of all, he pointed to the difficulty presented by domestic market competition in any country where scrap demand increases because of the introduction of new steel capacities, or because the winter is coming, or because steel mills want to take advantage of low scrap prices.

Mr. Meimaroglou went on to say that scrap prices are influenced by prices of other raw materials, including iron ore and steel billet, which can be used – as nowadays – as an alternative when prices allow it. He said that it is impossible to achieve the greater degree of stability that scrap suppliers are seeking in order to better plan their medium-term activity. Due to unpredictable market conditions, scrap suppliers are keeping their inventories low, which in turn results in increased volatility. He also said that, when scrap prices are going down and margin expectations also diminish, a significant number of scrap collectors halt their activities, which leads to reduced scrap availability.

Meimaroglou added that official policies and regulations, especially in some countries, is completely hostile to scrap exports, aiming to limit them as much as possible. Furthermore, financing by banks – due to the general economical situation, but also due to problems which have arisen in recent years in the steel sector – is becoming more and more difficult to obtain and more limited, Mr. Meimaroglu said, adding that the dollar exchange rate is becoming an important factor in cost creation, affecting the market and competition in different areas. In conclusion, Meimaroglu underlined the general view among all participants that scrap suppliers are currently going as low as they can in terms of prices while still managing to provide steel mills with regular supplies of good quality material. “Scrap exists. But we need real workable prices, allowing us to collect and to deliver properly to our clients,” he concluded.

Representing the Traders’ Committee, F.D. Baysal said that the antidumping petition in the US against rebar imports from Mexico and Turkey has become a major concern for traders as they are worried Turkish and Mexican rebar imports to the US might stop while the investigation is being carried out. Turkish participants at the event, including steel producers and steel exporters, all stated that the dumping claim is groundless and that, even if a decision of injury is reached, dumping margins close to zero will be decided. Furthermore, the Turkish participants, including the Turkish Steel Exporters’ Association, categorically denied that any government incentives were being provided for the Turkish steel industry. Some US-based traders speaking at the Traders’ Committee Meeting expressed their concerns regarding the lack of alternative sources of supply besides Turkey, stating they could not name any supplier country other than Turkey which “can supply rebar in any size, in any grade, in any volume and at any time.”

F.D. Baysal said that traders are expecting scrap prices to go down further for a while and then to stabilize, while iron ore prices are expected to decline for longer than scrap prices. Baysal also mentioned the possibility of an antidumping investigation being launched in the US against wire rod imports.

Ugur Dalbeler, Chairman of the Billet Suppliers’ Committee, said that Turkish billet export prices have not been competitive in recent times due to upward pressure coming from scrap prices, leading to a 40 percent year-on-year decrease in Turkey’s steel billet exports so far in the current year. On the other hand, Dalbeler said that steel billet export suppliers from the CIS have more competitive prices and increased sales to Turkey as a result, also given the higher billet prices in Turkey. Dalbeler stated that the situation in the US market is now good, while the euro zone is reviving slowly in terms of steel market activity. “After a difficult year in 2013, we hope to start seeing those old good days by 2015 and 2016,” he concluded.

Kim Marti, Chairman of the Rebar and Wire Rod Suppliers’ and Producers’ Committees, stated that global rebar and wire rod demand is growing, with further growth also expected next year. Commenting that Europe is emerging from its recession and is witnessing a more positive construction outlook, which will drive steel demand higher, Marti added that the economic outlooks for the US, Europe and Japan are positive and, since these three economies account for more than 70 percent of world GDP, the general outlook for the global economy is considered to be positive. He mentioned that the European mills were adjusting their capacity carefully in line with demand, before going on to say that oversupply is still an overwhelming problem in the world steel industry, with some regions where capacities keep on rising, such as in China. Marti also said that steel markets in the Gulf region, the GCC and more particularly in the UAE are performing quite well.

He also indicated a number of challenges which the steel industry is facing, namely, volatility of prices, overcapacity in the industry, credit restrictions and trade barriers, while also stating that the steel trade is becoming more regionalized.

Please click here to watch the video

The 67th meeting of IREPAS (International Rebar Exporters and Producers Association) was held in Munich between September 30^th and October 2^nd, 2012. There were 80 producer representatives from amongst the 276 registered delegates from 37 different countries.

Ioannis Meimaroglu, the chairman of the IREPAS Raw Material Suppliers Committee, said that steel mills have been trying to secure their orders before finalizing their raw material purchases due to instability and difficulties in the finished steel market, which means that they have been obliged to change their strategy from working on stock basis to working mainly on spot basis. He went on to state that this is affecting steel scrap suppliers very negatively since they cannot collect material on a continuous basis, as they do not know at what price level the material will be sold when their customers come to the market.

Mr.Meimaroglou added that this situation is also posing problems for steel producers, as they can never be sure of steel scrap availability at the requested prices on spot basis.

Underlining that scrap suppliers need time to collect scrap and cannot meet demand from steel mills at short notice, Mr.Meimaroglu said that scrap suppliers understand the concerns of the steel mills and the uncertainty in the steel markets, as steel export destinations become more limited and as Chinese steel exports target steel mills’ traditional customers.

He added; it is also very important for steel producers to help keep their raw material suppliers alive, as the latter are facing pressure from finished steel
markets and also price competition in their domestic markets, as well as fluctuations in currency exchange rates and export regulations.

Michael Setterdahl, the chairman of the IREPAS Traders’ Committee, listed the economical crisis and Chinese exports as major concerns in the market, stating that macro decisions made by some governments, especially China,  have recently been impacting the steel prices more than the producers’ own pricing policies. Mr.Setterdahl added that as long steel production is low globally except for China and Turkey , the outlook for prices of long products in 2013 is positive and recapped the discussions by saying “Everything depends on demand and supply, as always.”

Uğur Dalbeler, chairman of both IREPAS and the Billet Suppliers’ Committee, stated that the recent news on Chinese supply has put some pressure on steel billet prices in the international market. However, he went on to say that the view of the billet suppliers’ committee is that downward price movement may not be seen, as downward pressure on prices is expected to be softened by the oncoming winter season. The IREPAS chairman stressed that the real issue for the producers is to achieve healthy margins in business. The committee agreed there are shortages of scrap and that this is the main reason why billet prices have not decreased further. He characterized the general situation in the global billet markets as being in equilibrium. In conclusion, Dalbeler emphasized that, the
difficulties in scrap collection during winter months will provide support not only for scrap but also for billet prices.

Mohammed Al Saadi, the chairman of the IREPAS Rebar and Wire Rod Suppliers Committee, mentioned that the local Turkish market seems strong, with demand at good levels in the market. While the situation in Qatar and other Arab countries seems healthy with high production capacity utilization rates, demand in these countries is also good on the back of ongoing investments and projects. In the meantime, whereas political issues in Syria and Iran have been affecting the business in a negative way, everybody hopes the situation will be resolved in the short term, Mr. Al Saadi said.

Mr. Al Saadi explained that almost 65 percent of the production in Europe, especially Italy and Spain, is exported, adding that the US and Carribean markets seem stable, while global market conditions in general are likely to continue in their current state until next year. The committee considers the main market
concern to be Chinese supply, which also has a psychological impact on business.

Notes to Editors:

IREPAS is a global association of producers and exporters of long steel products. It was founded by CELSA and GERDAU 29 years ago to develop understanding between producers, traders and consumers around the world. Today, IREPAS unites producers, traders, consumers of steel and professionals from the shipping and finance industries.

Please click here to watch the interview

Michael Setterdahl, the chairman of the IREPAS Traders’ Committee, stated that traders are now increasingly seeing more regionalization in trade. Traders see the trade to North Africa as quiet, while demand coming from the Persian Gulf region has remained strong and Asian billet demand is mostly met by ASIAN producers  and  Russia’s Far East. Traders expressed their concerns regarding the possible oversupply of steel due to impact of international sanctions against Iran  and also regarding the political upheaval in Syria which has also caused trade to slow down in this region.

Ioannis Meimaroglu, the Chairman of the Raw Material Suppliers Committee, said that scrap collection levels are currently lower than normal. In some places like Russia, this situation has been due to severe winter weather conditions, but generally is due to low market price levels, which are not attractive for local suppliers. Mr. Meimaroglu pointed out that there are new threats which may place pressure on scrap prices, such as freight rate increases and cost increases in some countries, and such as the recent energy cost increase in Turkey. “If such costs are not absorbed by the end product market, the consequences for scrap collection will be very important,” Mr. Meimaroglu warned. Scrap demand remains strong in Europe, in the US and Russia. Short sea scrap suppliers, especially from the Black Sea, expressed the view that it will be very difficult for them to increase their scrap collection volumes due to the price policy of the steel producers. As regards the coming two months, the
lack of container availability is expected to cause scrap supply problems to India and to the Far East in general.

Uğur Dalbeler, chairman of both IREPAS and the Billet Suppliers’ Committee, stated that, due to the situation regarding Iran, steel billet supplies which used to be sent to Iran are now being consumed domestically in the CIS region, where steel billet consumption has remained strong in recent years and is expected to remain strong in 2012. Mr. Dalbeler said that billet consumption in Turkey and the Gulf region has also been strong so far in 2012, and that the outlook for billet consumption in
these areas remains positive. On the other hand, he said that the market situation in North Africa and Syria remains difficult to predict. However, there are positive expectations for steel billet consumption in Iraq. Regarding the Americas, the central and southern American markets have also started importing steel billet and the prospects are bright for these regions. Dalbeler concluded by saying that supply and demand in the billet market are currently balanced.

Kim Marti Subirana, the Chairman of the IREPAS Rebar and Wire Rod Suppliers’ Committee, said that the long steel market has started to gain stability, after the low activity levels experienced in February due to the cold winter in the northern hemisphere, adding that market activity is expected to accelerate in the coming month in line with better weather and increased construction activity.

The European long steel market remained fairly quiet in Q1, according to Kim Marti, while activity is expected to show some improvement in northern Europe in Q2. However, the same cannot be said for southern Europe. The outlook appears very bright for the long steel market in the Persian Gulf region, thanks to the positive economic situation there. Meanwhile, the US seems to be emerging from the recession, Marti said, also remarking that the outlook is good for rebar and wire rod in Central and South America.

April 1st, 2012 Sunday

19:00 – 23:00   Welcome Cocktail at London Hilton on Park Lane

April 2nd, 2012 Monday

09:00 – 10:00 Registration

09:30 - 12:30  IREPAS Committee Meetings

09:30–11:15   Wire Rod & Rebar Suppliers Committee (by invitation only)
09:30–11:15   Billet Suppliers Committee (by invitation only)
09:30–12:30   Raw Material Suppliers Committee (by invitation only)
10:30–12:30   Traders Committee (open to all attendees)

11:30–12:30   Producers Committee (by invitation only)

12:30 – 14:00 Lunch Break

14:00 Welcome Address by IREPAS Chairman – Mr. Ugur Dalbeler

SteelOrbis Spring ’12 Conference

14:00 – 15:30 Session One

Keynote Speaker: Kim Marti Subirana, Celsa Group
• Global Market & Macro Economics                        

PANEL: Global Market Supply / Demand

Moderator: Murat Eryilmaz, SteelOrbis

• David Faktor, Stemcor UK Ltd
• Ahmed A Aziz S A Al-Ansari, Qatar Steel
• Kerim Dilber, Turkish Steel Exporters’ Association

15:30 – 16:15 Networking Break

16:15 – 17:30 Session Two

Keynote Speaker: Colin Hamilton, Macquarie
• Economic Outlook and Effects on Steel Industry                          

PANEL: Risks and Price Volatility at the Markets 

Moderator : Phill Price, Stemcor UK Ltd

• Phillip Killicoat, Credit Suisse
• Martin Evans, CME Group
• Jeff Kable, JP Morgan
• Michael T. Zeitler, BNP Paribas

19:00 Gala Dinner at the Plaisterers’ Hall

April 3rd, 2012 Tuesday

10:00 – 11:30 Session Three

Panel with IREPAS Committee Chairmen

• Raw Material Suppliers Committee Chairman: Ioannis Meimaroglou, Helveco Intertrade
• Billet Suppliers Committee Chairman: Ugur Dalbeler, Colakoglu Metalurji A.S.
• Rebar&Wire Rod Suppliers Committee Chairman: Kim Marti Subirana, Celsa Group
• Traders Committee Chairman: Michael Setterdahl, Nucor Trading S.A.
• Producers Committee Chairman: Ugur Dalbeler, Colakoglu Metalurji A.S.