There were 123 representatives from 49 different producers among the 406 registered delegates from a total of 56 different countries. There were also 79 registrations representing 41 different raw material suppliers.

At the opening of the conference, Murat Cebecioglu, chairman of IREPAS, said that demand is still very weak in the global longs market and the situation remains difficult as mills are cutting back on production and protectionist measures are continuing full speed ahead, while China and other countries in Asia are exporting a lot, putting pressure on prices.

The IREPAS chairman added that there is very severe competition in the market, and every producer is fighting with its last penny in order to keep operating.

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: Global trade conditions are “devastating” due to uncertainty

Jens Björkman, the chairman of the raw material suppliers committee, said that, in the recent period, global trade conditions have been extremely difficult, describing the situation as “devastating” amid the current uncertainty. Pointing out that trade barriers and uncertainties continue to weigh heavily on the market, particularly with the US tariffs forcing some countries to find alternative destinations, he added that this shift has created pressure on other markets, including Turkey. Regarding the protectionism in the market, he stated that there are rumors that the EU will impose some duties on Asian materials due to the huge inflows of cheaper steel from the region. Meanwhile, noting that China, which is the main exporter of cheap steel, has signaled plans to reduce steel production and exports in 2025 and 2026, albeit the actual outcome remains uncertain, he said that, in the longer term, larger investments in EAF-based production are expected, supported by stable electricity supply and growing domestic scrap availability. China has also announced a cut of about 90 million metric tons in its steel production in 2025.

Highlighting that the planned green transition in the steel industry is increasingly being questioned, with many investments being cancelled and projects being delayed, Mr. Björkman stated that the EU’s move toward electric furnace-based production has now been postponed by at least three to four years. He underlined that, if carbon emission trading in Europe and the related pricing system are fully implemented, emission reduction technologies will need to be installed more widely. However, he said that, instead of hydrogen-based DRI, natural gas could be used in the short term. In addition, the raw materials committee chairman said EU waste shipment regulations treating scrap as waste will create more bureaucracy, especially for non-OECD countries needing formal approvals to buy European scrap, while OECD trade remains unaffected. Regarding the concerns over domestic scrap oversupply, he stated that Europe already faces excess supply overall, but certain grades like clean automotive scrap could face shortages. This imbalance, he explained, is why EU steel producers push to keep scrap within Europe.

Looking at Turkey, Björkman noted that the recent increase in freight costs has become a burden for suppliers, leading prices to increase slightly in Turkey, though how long this situation will last remains difficult to predict. Regarding the changes in Turkey’s inward processing regime, the committee chairman stated that Turkish mills, who are already struggling amid high costs, may become less competitive in the short term as scrap prices may increase slightly, leading the mills to reduce production.

Meanwhile, stating that raw material demand in the GCC market is expected to focus more on DRI/HBI, which remains limited in supply, he emphasized that larger volumes will be needed in Europe to support flat steel production and the green transition, though a mix of DRI/HBI and scrap is likely to be used.

Traders at IREPAS: Protectionist measures will continue for foreseeable future

F.D. Baysal, the chairman of the traders committee, said that China’s exports have increased at a much higher pace than its production. He stated that there are no expectations for production cuts in China and that its domestic stock levels remain at normal levels. In response to questions on how China is reacting to trade barriers, he explained that Chinese producers have begun investing in production facilities in other regions, including Africa and South America.

Looking at Turkey, Mr. Baysal said that the high cost of energy remains a key challenge for Turkish mills. He noted that, in order to save energy and comply with CBAM regulations, Turkish producers have started investing in solar and renewable energy sources, which are expected to reduce production costs. Meanwhile, saying that there are no clear plans in the EU to ease green transition requirements, though delays remain a possibility, he commented that CBAM will eventually be enforced, but significant work is still needed to establish reference levels for both European and overseas mills. He added that, despite uncertainties, European producers are already moving from blast furnaces to EAFs and investing in renewable energy sources such as solar to balance costs and meet future carbon requirements.

Commenting on protectionist measures, the committee chairman stated that the Trump administration’s tariffs, reaching 75-100 percent in some cases, have nearly halted steel imports into the US, while Canada and Mexico have also imposed strong protective measures, leaving the North American market heavily restricted. Stating that he believes that protectionist measures will continue for the foreseeable future, Baysal said that further barriers against cheaper Asian steel are likely, but stressed that free trade remains the best option, though current trends are moving in the opposite direction.

Regarding prices, he highlighted that the current spread between rebar and scrap prices stands at around $200 or slightly less. He suggested that this points to a likely regression in scrap prices. He also compared production methods, stating that blast furnaces currently hold a cost advantage of about $25/mt over electric arc furnaces as the latter depend on electricity prices, though these are lower in countries like the US. On freight, Baysal noted that container freight rates have come down from post-Covid highs of around $4,000 to about $1,200, adding that he does not expect them to fall further.

Producers at IREPAS: Chinese exports and protectionism squeeze global steel industry

Murat Cebecioglu, chairman of IREPAS and also chairman of the producers committee, said that, as demand is very limited, everybody is trying to protect what is theirs. “We can sell to the EU only once every three months because of the quota and it fills up as soon as the quota is opened. Because of China we cannot sell to many places. Chinese exports are hurting everyone,” he explained. The committee chairman pointed out that China is the main driver, exporting heavily at low prices, exerting pressure everywhere amid generally limited demand. Many countries are imposing protective measures not only on China but also on some other Asian countries, considering that the Chinese are quick to move their production elsewhere to avoid trade barriers.

Regarding Turkish mills’ capacity utilization rates, Mr. Cebecioglu pointed out that, under current market conditions, utilization rates are not at decent levels and, with protectionist measures still in place, Turkey has limited space to export, with only a few countries left, and competition is very tough in those countries. He also added that the countries to which Turkey used to export have become exporters themselves and this affects Turkish production in return. Turkey’s steel production capacity stands at around 60 million mt, but the country is currently producing just 38 million mt. In addition to trade measures, China is exporting heavily all around the world and, as it is difficult to give low prices to compete with the Chinese, in the end Turkish mills have to cut production, he remarked.

Commenting on China’s work plan for the steel industry in 2025-26, the IREPAS chairman underlined that the Chinese are always coming up with some kind of plan, but it is yet to be seen how much of it will be implemented and how they will proceed. This work plan, he noted, consists of many things; regulations, environmental constraints, shutting of inefficient mills, and technological upgrading for green steel and low carbon production. In the end, future competition will depend on being cleaner, he stressed. He also commented that, if this Chinese work plan goes through, it will mean that there will be export regulations, leaving room for Turkish mills to breath.

Talking about the mega projects in the GCC region, Cebecioglu said that demand is quite good in the region and GCC-based mills are also exporting to the EU and North African countries, where they are very competitive against the Turkish mills. As GCC mills have lower costs compared to Turkish mills, they have the upper hand in prices in terms of costs.

Demand in the global long steel products market continues to lag behind supply and the bottom of the market may not have been seen yet. The steel volumes being produced and being consumed are not growing. On the contrary, they are down in most regions.

A lot depends on China

Everyone one is expecting some move from Beijing, to slow down exports from China. The iron ore price has dropped down under $110/mt and there is talk about it falling further unless Beijing comes up with something great for the market. Chinese steel is still looking for export markets.

Turkish mills still struggling, may be forced to cut outputs further

Turkey has export markets, but not at prices that can be financed without pain. Demand in the EU needs to improve. Otherwise, along with the continuing Chinese exports, Turkish mills will be forced to reduce production further.

Total stagnation reigns in EU, safeguard extension to keep imports away

Business in the EU has neither improved nor worsened. It is in total stagnation. This situation has been continuing in the EU for about a year now and there are no signs of improvement in sight. Investments are still low despite the interest rate decrease and most of the cut and bend shops have free capacities such as they have never had for ages. In general, this situation is good for building and infrastructure, but the overall mood is bad. The extension of the safeguard measures for another two years in the EU, which will probably be replaced by the CBAM, will keep imports away from Europe despite the need to meet the CO2 emission agenda and the lack of adequate qualities for some products. It looks like Europe is supporting old industry instead of investing in new industry and technology.

US producers doing well amid satisfactory demand and import barriers

In the US, demand is satisfactory. The majority of demand comes from infrastructure projects, new renewable energy projects and some commercial construction. Residential construction is still slow due to high interest rates. As far as supply is concerned, US domestic mills have built enough new capacity to meet all demand and therefore the price is at the same level or better than import prices, making imports not so attractive. Of course, Section 232 and additional antidumping and countervailing duties make imports even less viable. China’s additional exports are not a factor in the US as there are even more duty barriers against them. Of course, this is only good for US producers.

Margins eroded as ferrous scrap prices hold their ground

The ferrous scrap price in the international market is still holding, which eats the margins of steel producers down towards zero. North American scrap has been down every month this year, yet flows keep on coming. June is usually not a positive month.

Most market players optimistic for the longer term not the near term

Most players in the market believe that a better future lies ahead. However, taking into consideration the approaching holiday period, it is hard to hope for something positive in the short run.

Regionalization continues to gain ground

The market is very much regionalized and will certainly continue as it is. More and more markets worldwide are closing their doors, as in a new fashion, and those with overcapacities of production will suffer. At the same time, downstream industry will suffer everywhere where no competitive feedstock products are available. Consequently, the EU will be bombarded with ready finished products from the same sources which previously provided only the feedstock products.

Competition intense wherever Chinese exporters are operating

Competition is active and intense where Chinese exporters are active. Otherwise, the global market is quiet.

Market unstable and fluctuating except in EU, outlook unsatisfactory

Under the current circumstances, the market can be described as unstable and fluctuating, with the exception of the EU where it is stable but at a low level. Market players are mostly in wait-and-see mode, but the outlook is unsatisfactory and in line with the international political outlook.

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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.

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The global long steel products market is slowing down in general, which is putting pressure on producers. Demand for reinforcing bars and wire rods remains very weak and there is strong pressure on prices from the new exporters – Algeria, Egypt, the UAE and Saudi Arabia – who are in the market with very aggressive offers.

Business still stagnant in US, high interest rates a major factor 

Business in the US is still stagnant. Demand has slowed down and supply is the same, putting pressure on prices. High interest rates constitute the biggest factor in the slowdown of both commercial and residential construction. The US Federal Reserve’s efforts to keep inflation under control are working, while slowing down the economy. Flat steel prices are still under pressure, with flats mainly supplied from domestic sources.

Non-traditional sources active in exports, Turkey struggles due to trade measures 

Exports are only active from non-traditional sources like Algeria and Egypt, which are subject to no antidumping or countervailing duty measures so far. Turkey has been unfairly hit with high antidumping duty, when one mill honored a contract made before the Ukrainian war and delivered as pledged, even after the surge in prices. All Turkish mills (except one) were conveniently painted with the same brush.

New US and EU measures target Russian exports of semis and raw materials 

It seems that the situation in Ukraine will be a never-ending story. However, the new restrictions to be introduced by the US and the EU will create more complications for producers who import Russian semis and raw materials and export their goods to the US and the EU, namely, Turkey and Egypt. The EU is already demanding a declaration from producers confirming no Russian input for goods that are shipped into the EU. US officials are paying visits to individual companies explaining the risks of not cutting ties with Russia. We will witness more circumvention cases in the coming period. The halting of Russian steel imports in six weeks’ time into the EU should have a significant impact. It is difficult to prevail in defensive cases, which may cause Turkey to strongly reduce imports from Russia.

US and EU to produce less steel in 2023 than in 2022 

Both the US and the EU will produce less steel in 2023 than in 2022.  In the US, flat product output is down five percent year to date, while domestic long product output is down even more.

Europe very quiet due to holidays, private sector investors lack confidence 

Europe has been very quiet over the last few weeks due to the holidays. Prices are very flat and there are no signs of improvement in sight. The main reason is low activity and low ordering from the market. Mills are fighting for every ton which is available. Overcapacities in the EU are preventing mills from raising prices. Imports are practically non-existent right now as one can see from the safeguard import statistics. All EU countries are trying to avoid a recession by injecting money into the economy, but the private sector is afraid due to all the uncertainties surrounding energy prices, interest rates and additional burdens which may come from Brussels in relation to CO2 emissions. All these uncertainties are holding the private sector back from investing.

Strong domestic construction in Russia restrains its exports 

Russia is experiencing strong growth in its domestic construction sector and so it is not so hungry for exports.

Stimulus packages in China have no impact on its exports 

So far, all stimulus packages introduced in China have had no impact on exports that affects global steel prices. China’s BOFs are working at over 90 percent capacity utilization and EAFs at under 50 percent.

Scrap demand falls amid reduced steel outputs, scrap prices hold firm 

Slowing production has also led to lower ferrous scrap demand. European demand is expected to contract in the coming quarter. Although demand is slowing down for scrap also, inflows are dropping for scrap traders. Availability is low and this is exerting pressure on recyclers to get material to their yards and shredders. Scrap prices are still holding firm, mainly because suppliers are much more organized. They may stay around the mid-$300s/mt unless demand for reinforcing bar falls further. India seems to have a weak domestic market, but, on the other hand, it is paying top bucks for scrap, which supports scrap at the mid-$300s/mt.

Some new projects in Europe, Turkey and S. Arabia to provide support 

There are a number of projects coming on stream in Europe and Turkey. There is also the NEOM city project in Saudi Arabia, with demand for a huge quantity of reinforcing bars which is supposed to come on stream shortly.

Freight costs lower but still higher than before pandemic, clean energy an issue for steel sector 

Raw material prices are softening a little and shipping prices are coming down but are still higher than pre-pandemic prices. New policies on carbon emission limitations and clean energy will be a problem for the steel industry in the future. Ironically, a lot of Chinese “clean” energy technology is made in factories using coal-powered electricity. Clean energy technology should come from clean supply chains, though cheap Chinese inputs such as polysilicon for solar panels and critical minerals for batteries are often made or extracted by cheap labor in other parts of the world.

US still a locomotive of the global economy 

The US economy and US industrial orders are still the locomotive of the global economy. Electricity prices have also lessened since last year’s fluctuations. Inflation no longer seems a threat and in general autumn is expected to be better than the first seven months of 2023.

International competition weak amid low prices and high logistics costs 

International competition in the market is weak because prices are so low that logistics are killing trade. There is almost no international competition. Otherwise, the competition is for volumes, not to increase them or simply to keep them stable, but rather to limit the slide in volumes as much as possible. Imports are dropping in North America and the EU, which of course affects the MENA region and Latin America.

Current market status unstable, outlook unsatisfactory except for scrap suppliers 

Under these circumstances, the current status of the market can be described as unstable and unpredictable. The outlook for the next quarter is mostly unstable and unsatisfactory, except for ferrous scrap suppliers.

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The global long steel products market is still characterized by unpredictability. China’s impact on the global markets is still an open question and this contributes to the unpredictability for the second quarter. It seems that customers heard too much talk of recession last year and were convinced that all construction would stop in 2023. Actually, it looks like Europe managed to avoid recession in 2022 and even in January Germany showed economic growth. Core inflation is going down and the situation looks much better than expected in Europe and the US.

European market still extremely quiet after the holiday period

The European market is extremely quiet since all clients have just come back from the holidays. Mills are not able find customers as they had all bought their requirements by the end of November in order not to be taken by surprise in the new year. New private housing projects in Germany have almost fallen to zero. The high costs of products combined with 8-10 percent inflation and consequent higher mortgage rates in addition to the lack of workers have made calculations unpredictable for investors. Moreover, the government has reduced funding for social housing despite its declared goal of building 400,000 apartments every year. Last year, they reached approximately 50 percent of that goal and for this year the expectation is even significantly less. On the other hand, public and industrial projects are still fine, but increasing costs, bureaucracy and appeals against every new big project of whatever nature as well as the lack of labour force delays for almost every one of them.

Overcapacity in EU cut and bend sector, price rises difficult, imports coming from N. Africa

Overcapacity prevails in the cut and bend industry in the EU. But instead of slimming down, market players bid for every deal even if they speculate on a price drop of €100/mt. The behaviour of a few players is pulling the whole market down and still leaves no room for producers to increase prices. There are imports of wire rods coming to Europe, but instead of Asia they are now arriving from North African countries like Algeria, Egypt and Tunisia. The volumes are enough to keep the market prices suppressed. At the same time, however, the EU import quotas are in general not approaching anything like maximum utilization.

Situation in North America quickly becomes positive

The situation in North America has become positive very quickly and business in the US market is stable. Most of the sales are closed by domestic mills, due to the very competitive prices offered, and also as almost all new infrastructure projects have a “Buy America” clause. Steel mills have had an uptick in orders at somewhat higher prices, which have mostly been driven by scrap price increases. Turkish buying ahead of the January buy-week helped drive up scrap prices in the US. US ports are still congested, making imports even more cumbersome. Whether real hard consumption will also provide support is an open question. The mills in the US are saying that infrastructure consumption increases are yet to come, starting in the second half of the year.  Imports are priced at levels which do not support a switch from domestic products to imports, while lead times are also “normal” for domestic materials.

Question mark remains over demand in Latin America amid political instability

Elsewhere in the Americas, in general the good news is fewer aggressive offers from Southeast Asia for all products. Meanwhile, there is still a big question mark over demand in Latin America due to the political instability in several countries in the region. Some traditionally non-exporting countries in Latin America have started to look to the international market in the past few months.

All Turkish mills are struggling to export

Currently, all mills in Turkey are struggling to export. Strong competition from Egypt, Algeria, Tunisia, Malaysia and Indonesia and offers heard from GCC countries are making it very difficult for Turkish mills to export. Of course, on top of all that, protectionist measures such as quotas, Section 232, normal values and AD/CVD rates make exports almost impossible. Increased energy costs and higher scrap prices are also putting pressure on prices and make it difficult for Turkey to compete.

Devastating earthquakes in Turkey and Syria also hit steel sector in Iskenderun

Devastating earthquakes hit southeastern Turkey and northern Syria on February 6. The fire which damaged Iskenderun port will hamper trade from the region. Following the natural disaster, market players will have to wait and see, but in the very short term mills in the Iskenderun area are not receiving energy for their production activities.

Raw material and scrap prices rise after New Year holiday, demand rebounds strongly

Raw material costs are very high and scrap prices rose unexpectedly after the New Year holiday. Another important factor is that scrap prices in Russia went up and for the first time in a long while Russian mills are not aggressive in exports. January indeed saw a strong demand rebound for raw materials. This was led primarily by China, which dramatically removed its remaining Covid restrictions and also stimulated its economy.

Stronger production rates in January as recession seems to have been avoided

While the markets had been optimizing for recession with low inventories and lower production rates towards the end of last year, January saw stronger production rates as an energy-induced recession seemed to have been avoided. Energy prices fell as well as logistics costs. Buying activity was much stronger as inventories were depleted and had to be reprogrammed for stronger production rates. Both of these factors on top of decent demand levels contributed to rebounding raw material prices. Europe looks much better than previously expected. Also, energy in storage is at high levels, while the weather has been fairly mild.

Temporary absence of Chinese export offers amid local market improvement

China is back from its New Year holidays, and so there is some activity. The small signs of an improvement in the Chinese market have led to a temporary absence of its offers from the international market. Furthermore, energy and logistics costs have declined a little, providing some relief to many players in the market.

German and European domestic prices equal to or lower than import prices

In Europe, German domestic and other European prices are lower or equal to import prices. Imports are almost at a standstill as can be seen from the utilization of quotas. As there are almost no imports, this leaves room for domestic mills to raise their prices as soon as seasonal demand picks up.

Competition again becomes more regional

Following the aggressive presence of Asian countries in export markets at the end of 2022, it is reasonable to say that competition has once again become more regional. However, there is still strong competition for Turkish producers as there are not many places where they can sell their products.

Current status of market still unstable and fluctuating

The current status of the market is still unstable and fluctuating. No one can predict the level of raw material and energy costs going forward this year. Plans may change instantly.

EU’s CBAM to start to have an impact later this year

Another aspect which importers in to the EU market must face shortly is the EU’s Carbon Border Adjustment Mechanism (CBAM). Although there is still some time before it will be a real cost factor, the bureaucratic hurdles will start in October this year.

Market outlook remains unpredictable and challenging

Under the above circumstances, the outlook for the global steel long products market is unpredictable and challenging, though everything points out to a market turn any time soon, at least in the EU.

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The war in Ukraine has changed sentiment in the global long steel products market as well as fundamentally altering the flow of raw materials and finished products almost overnight. There is more demand than secure supply in the market. Before the war, the expectations were that demand would determine the direction of prices, contrary to 2021 when supply was the driving factor. Today, however, supply has definitely taken the lead again and the market is in fact distorted.

Sanctions on Russia to continue for some time to come

Hot rolled coil prices ex-China are lower than slab prices, which in turn are lower than prices of basic pig iron. We hear of a new set of sanctions every day, for different targets using different means, issued by different countries, besides which the payment side is totally confused. There are many different ways of approaching the sanctions. Disruptions of supplies of semi-finished and finished products have opened new opportunities for others, especially for Turkish mills who share the same geographical region. However, nobody has any clue how far this madness will go, but one thing is for sure: the sanctions on Russia will remain in place for some time to come.

Price imbalance emerges between Asia and rest of world, European prices the highest

The Western hemisphere has stable demand with short supply depending on the product. There is stable demand also in the Eastern hemisphere, but the strong presence of Chinese and Southeast Asian producers results in a price difference between these two regions. Consequently, there is a price imbalance between Asia and the rest of the world. The difference between Turkish origin reinforcing bar and wire rod prices and Chinese, Vietnamese or Malaysian origin reinforcing bar and wire rod prices is more than US$100 per ton. The price difference between the North American and the EU/UK markets is even greater. International markets are becoming more regional than ever. European steel prices are now the highest in the world. Asian and especially Chinese prices are substantially lower than anywhere else. The steel trade is changing direction from selling to Asia to buying from Asia.

New destinations sought for Russian raw materials and semi-finished products

Russian raw material and semi-finished products are searching for destinations that are willing to import and at new discounted prices. It seems that Russian finished products are not being exported yet at all.

Demand and prices increase in EU amid reduction of mills’ capacity utilization

EU mills are concerned how all these disruptions will impact their production and are not willing to make any long-term commitments. Sales from stocks on a daily basis are becoming fashionable and the market has no other option but to accept this situation. The reduction of capacity utilization rates and the fears of stoppages by some mills are resulting in higher demand from the market than usual, as construction companies want to secure material for their projects. Prices have increased significantly with the lack of import options supporting the upward movement. Brussels is not ready to lift its safeguard measures despite strong protests from downstream industry.

Supply and demand stable in the US

Demand in the US is the same and supply from domestic producers has not changed either. However, considering the fact that the mills are running at full capacity, it is fair to expect that any increase in demand will have to be compensated for by imports. Import restrictions and therefore prices from regular suppliers have increased dramatically due to the war in Ukraine. With this, the prices in the US are also on an upward trend, catching up with the rest of the world.

Lower capacity utilizations and shutdowns in EU make more scrap available for Turkey

Scrap exports from Russia and Ukraine are almost at a standstill. However, EU steel mills have refused to pay more for scrap and have reduced their capacity utilization rates. There have even been complete shutdowns in some cases, creating extra supply of scrap in the market for Turkish mills. As a result, the Turkish mills have compensated for the missing quantities from Russia and Ukraine by the extra availability of European scrap, which has helped them keep scrap prices under control while at the same time they are exporting extra volumes of steel to the EU market.

New opportunities but also imbalances created by absence of Ukraine and Russia

The sudden disappearance of two major steel supplying countries in the global market has suddenly changed the supply and demand balance in favour of suppliers in other countries. The spread between raw material to product has become much bigger than predicted at the beginning of the year. The situation certainly creates many new opportunities but also major imbalances.

Competition from Asian mills increases gradually

Competition in the market is very regionalized, except for some products suffering from the impact of the conflict. The traditional competition from CIS-based and European mills has disappeared. The new competition, which has been slowly appearing, is from Asian mills.

Some weeks needed for unstable market to find equilibrium, outlook still very uncertain

Scrap price increases will continue, but the war is a major negative factor for the market. It will take some weeks for the market to find its equilibrium. Under the current circumstances, the market can be described as fluctuating and unstable. The outlook is very uncertain as the fundamentals may change daily.

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Supply and demand are balanced in the global long steel products market, as regional producers are now back to almost normal lead times.  Energy prices are soaring and logistical challenges have made business more uncertain, though underlying demand remains solid in Europe and North America. The ongoing weakness in China may slow its imports, which could negatively affect general sentiment. Inflationary pressure and soaring energy prices are observed around the world and especially in emerging markets where demand is normally strong.

New US-EU deal could bring opportunities for European longs producers

The new agreement between the US and the EU may open opportunities to see more EU origin reinforcing bars and wire rods in the US market, which may provide relief for EU mills, which are currently suffering from high energy prices. However, it seems that the EU long product mills do not have much appetite for exports to the US market, at least for the time being. The quotas to be given to the EU mills will not be large and the specifications required by the US market are not ideal for EU mills. Incredibly high freight costs constitute another negative factor. The scope of international business in the US depends on the country exporting to this market. Prices in the EU are already high and immediate capacities are full, and so no significant impact on prices can be expected until the third quarter. In addition, because the quantity for export will be limited to 3.3 million mt, the incentive to sell at low prices will be eliminated.

Protectionism foreseen to continue, with more regionalization of trade

On the other hand, the US-EU agreement confirms that protectionist measures will unfortunately continue. The US and EU are forming a new structure to trade to each other and to leave others out. Business is now going to be even more regional and this will affect the whole supply chain. More trade cases, also even for downstream products, can be expected to be filed.

Congestion in shipping and at ports still a major negative factor worldwide

For the rest of the world, the main negative factor is still the congestion in shipping and at ports. Any contract that was done in the second quarter now faces huge shipping costs, thus making the contract unprofitable. With this and the tightening of scrap prices, one can expect domestic long products in the US market to continue to remain strong even in the first quarter next year.

Asian markets see swing movements, centre of gravity moves more to Asia

The Asian markets, including the Asian subcontinent, have continued to see swing movements in buying and selling. It feels like the centre of gravity is moving more towards what we all expect from Asia.

Overall demand expected to remain good in 2022

Regional demand is strong for long products and raw materials. Overall demand is expected to remain good in 2022. Stocks in the EU have been replenished and demand is back to normal and so is supply. This situation will prevail throughout 2022 as investments are popping up all over the place. Moreover, it seems like China is going to keep its promise to limit steel production to last year’s level. Miners, steelmakers, consumers and service centres are all making money.

Greater focus now on environmental impact of steel production

The awakening of many steel producing countries to the environmental impact of steel production is a very good sign. Starting with the largest producer China, the EU and the US have now begun to pay attention to environmental impacts, adding new restrictions. Though this is positive for the Earth, it will certainly increase the cost of steel production and will add more regulations for traders.

Competition in global longs market appears to be lower

Competition in the global long products market appears to be lower, most probably due to all the current trade measures. As for raw materials, competition is generally in a good solid condition.

Global longs market stable despite many uncertainties

The global long steel products market is stable at the moment despite many uncertainties including power shortages and costs, the Evergrande case in China, and the US-EU deal.

Outlook for next quarter is satisfactory, new capacities in 2022 need to be watched

The outlook for the global long steel market for the next quarter is satisfactory and surprisingly stable. There is a lot of downtime being scheduled for November and December, and important new capacities will be coming on to the market in 2022. It will be critical to see if these new capacities will find new customers.

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In the global long steel products market, there are signs that supply has caught up with demand and that the supply-demand balance is becoming more neutral. The market seems to be getting back to normal in terms of lead times, prices, etc. We are now in a period where things have to get back to normal, which in fact may be different from where it all started. A price range higher than the beginning of the fourth quarter of 2020 will probably be the new normal. On the other hand freight rates are still incredibly high.

…but Section 232 and EU safeguards still in place

The supply-demand balance seems to be back on track, but of course with the caveat that Section 232 is still in force as well as the EU safeguards, which make supply in both places shorter than necessary. The protected markets will continue enjoying their positions until the measures in question are terminated.

Slowdown in Far East a blow to the global longs market

We should also be following the Southeast Asian and Far Eastern markets. The slowdown in the Far East has dealt the market a strong body blow. The Asian markets are making adjustments, but most would say that everyone is happy over there. The Indian and Vietnamese mills are exporting, while new plants in Indonesia as well as the Japanese mills are making historic profits. South Korean mills most likely will do the same. The Russian mills located close to the ports are still paying their export tax and continuing to export.

EU cut and benders face rising stocks

The stocks of the cut and benders in the EU are being filled up more and more and a number of projects are being put on hold or being delayed due to the high prices for all sorts of construction materials including deformed reinforcing bars. The cut and benders are feeling a significant drop in order income and are holding their breaths to see how the EU mills will react to fewer order entries. But with the holidays ending, stronger demand is expected before the winter starts. As a result, no meaningful drop in EU mills’ prices is expected, especially due to the lack of alternatives from imports. Most of the cut and benders have been managing the drastic price increases so far and low-priced projects are fading out.

Supply seems to be catching up with demand in US market also, imports still difficult

Demand in the US is high, but supply seems to be catching up with the demand in this market as well. There are still some shortages, especially on the West Coast.  However, it is difficult for imports to fill the demand shortages due to shipping constraints. With the erratic and historic high shipping prices, most mills prefer to offer on FOB basis. Importers who buy on FOB basis on all occasions are in for a surprise when cargoes are ready to ship. To add to the problem, most ports are full and do not wish to receive more cargoes. Especially for rain-sensitive cargoes, indoor storage space hardly exists. With all these high prices, credit has become an issue for importers. Hardly any buyers have full credit to insure the receivables.

Freight rates out of touch with reality, no one wants to book on FOB basis

Freight is a major factor nowadays. Even for the traditional routes, freight rates have lost touch with reality. Traders have been punished by the high and unpredictable freight costs and are now careful as regards new business. No one wants to book on FOB basis. It is getting more and more difficult to get a quotation, which makes it difficult and/or risky to offer on CFR basis as well. This situation will create short-term downward pressure on prices and long-term shortages in importing countries. Regionalization is the current trend as sea freights are exceptionally high.

China’s steel output restrictions may buoy up steel pricing

China’s restrictions on steel production at 2020 levels will mean stronger Chinese demand for semi-finished steel imports, which should support other regions, especially ASEAN producers. It could also buoy up steel pricing. China’s announcement of production cuts is welcome amid environmental concerns and may support worldwide billet prices, but it may also put further pressure on ferrous scrap prices due to less demand. Most Chinese production is based on iron ore and has already gone down a notch, and so the impact on ferrous scrap may be limited.

Europe impresses with steel production performance in January-July

European steel production strengthened during the first seven months of the year at a stronger pace than production in many other regions. Scrap demand in the intra-European market has been stronger than normal, and this situation seems set to continue for the coming quarter. Semiconductor and component shortages continue to weigh on industry. Supply of higher quality scrap grades and industrial scrap has become tighter.

Coronavirus vaccinations should support demand levels

Although the number of Covid cases is still high and we are again entering the season of colder weather in the northern hemisphere, the post-pandemic rebound and reopening are continuing despite setbacks due to the Delta variant of the coronavirus. The vaccination process will surely allow us to continue with our daily lives and so demand should continue.

Insurance becomes an issue due to increased value of cargoes

Demand is still good and mills are booked for the next few months. Moreover, huge investments are on their way. Payments seem not to be a problem even though insurance is becoming an issue simply because the value of cargoes has reached very high levels.

Future looks promising due to planned infrastructure investments worldwide

Almost all countries are looking at some type of stimulus plan, with infrastructure being high on the list as it is the easy choice. Money is easy to print for the US and the EU, while all others have to borrow at somewhat reduced rates. Stimulus money is still flowing and infrastructure spending in particular looks to continue for several years in the EU/ UK and North America.  Nevertheless, the future looks promising for infrastructure investors. It is also a good time to be melting domestic scrap and selling long products regionally.

Competition starts to normalize

The competition in the market is also expected to get back to normal, with demand reaching pre-pandemic levels. There is strong competition between Turkish long product exports to Asia and Asian-produced material. Otherwise, competition is normal and acceptable. As for the ferrous scrap market, there is regionalization and competition is strong in general,

Overall situation stable in global longs market

Overall, the current situation in the global long steel products market can be defined as stable and perfect to proceed, with some fluctuations here and there.

Satisfactory outlook for next quarter in EU, some price cuts possible in North America

For the most part, there is very little steel to be sold during September, October, November and December. The outlook for the next quarter is satisfactory in the EU, as for the ferrous scrap market. However, some downward adjustments in the North American market may be seen and negativism is bound to spread and may affect other markets. Accordingly, it may be time to wait and see or to proceed with caution in some markets.

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Demand in the global long steel products market has continued to increase recently, and particularly demand in China and developed economies continues to push the market up. At the same time, international supply has tightened even further. Most mills are offering a few months ahead, thereby contributing to upward movement of prices. There are imbalances in rebar supply-demand, but it looks like customers are resigned to accepting the continuing price increases. The spreads on production have increased overall.

Strong demand and short supply in EU, construction companies squeezed by high prices

Demand in the EU remains strong, but the market is short of steel. Construction companies have tried to push cut and benders down on price by holding back orders but are now with their backs to the wall and have to place orders at much higher prices compared to their budgets. Most European cut and benders hold very toxic order books, with sales being approximately €200-300 per metric ton below replacement costs. EU mills could easily increase prices significantly as there is no available alternative for benders. Imports are not competitive, and quotas have been fully used up. Rebar prices compared to HRC prices are completely out of line.

Prices at record highs in US, domestic producers in control, credit an issue for customers

The North American market is also short of steel. In the US, demand is way up, but to ensure supply is far more difficult. The order books of all domestic mills are full, with order deliveries extending up to four to eight weeks. Imports are even harder to ship, as international mills are even busier. Besides, shipping is a big challenge, with more delays at double or triple the costs. Prices are at historic highs, making credit decisions even harder. Almost all customers have maxed out their credit limits with double the prices on most items. In short, the situation is most advantageous to domestic producers who are working at near full capacity, but traders have difficulty in supplying and/or financing the growing demand. Inflation in most commodities is around the corner. While both the US and the EU are short of steel and still have their protectionist measures in place, it seems that this situation will continue for a while yet.

Chinese production surges, its semis imports provide boost for global prices

China continues to roar ahead, now surpassing three million metric tons of liquid steel production per day. Despite the surge in Chinese steel production in the first and second quarters, China keeps importing semi-finished material, which has pushed up prices in the global market.  At the end of April, China announced the cancellation of the tax rebates on exports and, as a result, it most probably will not be exporting in the near future. This will open new opportunities for other market players like Turkey to increase their exports. Such recent decisions in China should result in pressure pushing prices up even more.

Iron ore prices rising, Asian market back to pre-Covid levels except for India

Iron ore prices are heading higher and the Asian market is fully back to pre-Covid levels, except for India whose steel output and scrap imports are expected to be negatively impacted.

Turkey remains an exception to the positive global longs demand situation

Demand for long steel products globally is good except in Turkey due to the high interest rates there. However, highest-ever prices are being experienced in the flat steel segment worldwide.

Demand increases even further in Latin America

Latin America is no exception in the global market. Supply is tightening and demand is increasing even further. Brazil is deciding to export less due to domestic demand. With further improvements in the vaccination process in Latin America, an increase is also expected in the demand scenario, which is already at a good level. Domestic sales continue to improve in the region, with higher volumes compared to the pre-pandemic period.

Lead times extended, entire supply chain is earning profits

Lead times are long in the market and the entire supply chain is earning profits. Disrupted supply chains and low stocks create pockets of demand in different areas of the world, which keep driving the market up. Stimulus programs also help increase demand. Although there has been news of more capacities coming back on stream, it seems the current situation will continue for the rest of the year.

Vaccinations and summer season to support return to normal, boosting demand

The global business environment is getting better with the increased distribution of vaccines, especially where they have been administered at rates exceeding 30 percent. Vaccinations and the summer season will help most countries resume a normal form of life, which in turn would support demand.

Credit insurance becomes an issue for buyers as prices continue to rise

Shipping is still the biggest challenge. Besides shipping, credit insurance is decreasing in volume as prices go higher. So far, steel mill customers have been able to find ways to circumvent this, but it remains an issue for the future. Another issue is that lead times are shrinking in the US market for ‘nice orders’. On the other hand, geopolitical winds may cause changes in the landscape.

Competition is healthy, outlook for next quarter is very good

Competition in the market is healthy but demand is sufficient for everyone. Accordingly, there is no concern about competition in general. The current status of the market is perfect to proceed with a very good outlook for the next quarter.

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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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