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

Ongoing conflicts continue to create uncertainty and raise costs

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

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

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

Scrap prices remain strong despite weak demand

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

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

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

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

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

Long steel market in Germany remains very weak

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

Mixed bag of positive and negative factors in US market

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

Some positive developments in terms of investments

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

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

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

Divergence between open and protected markets

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

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

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

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

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

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

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

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

On the last day of the conference, producers of long steel products, as well as traders and raw material suppliers, shared the conclusions reached at their special committee meetings regarding the current situation in the markets with the general participants at the event.

Raw Material Suppliers at IREPAS: Tighter supply, geopolitics reshape global scrap market

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The uncertainty in the global long steel products market has increased dramatically. Nowadays, the most stable region is China, where steelmakers have been increasing their weekly production volumes, whereas the rest of the world is just trying to hang on.

Ferrous scrap and iron ore price trends decouple completely

Ferrous scrap and iron ore price trends have completely decoupled. Iron ore prices have hit five-year highs at over $100/mt delivered to China. Currently, there is almost no margin left for BOF mills. On the other hand, ferrous scrap prices are decreasing. Meanwhile, Turkey, the largest importer of ferrous scrap in the market, is suffering deeply from the collapse of domestic consumption.

Worrying signs amid increased global output and unsatisfactory demand in EU and US

The main issues affecting the market are, first of all, the production increase that the world steel industry has seen since 2016 and, secondly, the unexpected drop in demand in the EU and the activity in the US under the Trump administration which has not been as good as predicted.

China performing well, other regions experiencing difficulties

Steel production globally continues to grow at a strong rate. China is set to break through one billion metric tons in 2019 should it continue at the current pace, while its exports are still muted based on strong domestic consumption. China is also adding EAF capacity at a fast pace to absorb domestic scrap generation and make use of the relatively cheap raw material. In Europe and Turkey, capacity utilization is being cut due to slower orders – in Europe mainly due to headwinds affecting the light and heavy automotive sector and in Turkey due to its reeling economy which is contracting. In the US, capacity has been added which weighs on steel pricing.

Global steel industry still in a better position compared to 2014 and 2015

Overall, the last three years have been very healthy for the steel industry. This year is still fairly good compared to 2014 and 2015. However, mills will struggle in the short run mainly due to the cost issue. The poor demand in the EU and especially in Turkey will pour salt into wounds. Thus, it is time for some mills in some areas to adjust and reposition themselves based on the situation outlined above. Many scrap melters around the world have already decided that less could be better. Meanwhile, ArcelorMittal Europe is the only blast furnace-based producer that has announced cutbacks in production in order to increase prices, and this seems to have worked for now.

US mills show signs of panic, rush to cut their prices

Prices keep going down in the US market. The demand is there and is stable, but the fear of losing the market to imports has convinced domestic mills to race to drop their prices, sometimes without even being asked. Domestic mills were enjoying 25 percent-plus margins, but then President Trump cut the duty on imports from Turkey to 25 percent and the market panicked. Almost at the same time, he announced that the Section 232 tariffs on imports from Mexico and Canada would be reduced to zero, which should affect the market, but the on-again off-again Mexican duty (tied to other matters) made buyers cautious again. Both Canada and Mexico are under notice to not sell more than what they sold before. Regardless, US domestic mills are very uneasy as they have plans to add even more capacity. In addition, the softening of ferrous scrap prices has created expectations for further decreases and has influenced buyers to delay their new purchases.

EU protectionist measures fail to provide expected benefit for domestic mills

In Europe, the current quota system is helping to keep prices stable in many markets, but the safeguard measures have not brought the expected benefit for EU mills. Too many cargoes arrived at the start of the season in February and April and clients have filled their stockyards. Subsequently, mills had to reduce their prices to collect new orders. Now, however, the next wave of imports is expected to arrive in July, which will probably cover a good portion of the demand for the summer period.

European mills under pressure

The collapse of British Steel, the announcement of price increases by ArcelorMittal for long products, and the imminent maintenance stops of European mills could help to increase the prices for long products in the EU market. However, the price trend of ferrous scrap and the general sentiment in the market do not help. Besides, it is quite difficult for European mills to export steel out of Europe due to low prices elsewhere. Therefore, the current alternatives are either to push more steel into the domestic and regional markets and thereby of course end up putting downward pressure on prices, or, on the other hand, to stop production.

Asia outperforms rest of the world, low oil prices a positive development for global market

The stability of China is very important for the global steel industry, while some dramatic change could be seen after the G20 meeting. Steel demand globally continues to grow and keeps encouraging market players. Asia is outperforming the rest of the world. Oil prices have dropped considerably since April, which constitutes another positive development.

Scrap prices currently very attractive but falling prices to eventually impact scrap generation

The scrap to iron ore price ratio makes scrap look very attractive at current levels. The problem for scrap at the moment is the construction sector in scrap-importing Turkey and also the fact that spring in the US has generated a lot of scrap flow. The falling scrap prices will eventually slow scrap generation and availability.

Protectionism limits pressure from competition

More steel producers are willing to take a second look at lower prices. However, the pressure from competition does not seem to be strong and has been diminishing due to political protections in general. Competition in the market is still very much determined by geopolitical factors.

Changeable protectionist picture is the main contributor to current instability

Unfortunately, trade barriers and the tariff picture for the balance of this year is quite uncertain, far outweighing any uncertainty in demand, supply and competition. Margins for steel producers are approaching ‘painful’ levels.

Political developments will need to be watched

The first and foremost problem is capacity utilization which has been decreasing in 2019 in many regions. On top of that, there will be more elections from Istanbul to Jerusalem, the G20 meeting in Tokyo, the US-China trade meltdown, and crude oil crises linked to Venezuela and Iran.

Outlook for market characterized by greater unpredictability

Under the current circumstances, the market can be described as fluctuating and unstable. The outlook is very much uncertain, less predictable and weaker.

Some stabilization may be seen over the summer months

Scrap accumulation is expected to slow down over the summer months in part due to lower prices and in part due to industrial vacation periods. Demand and supply will then become better balanced and stabilize pricing.

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While the supply and demand balance in the global long steel products market still looks good, the supply side is gearing up. Supply pressure is not expected to create big problems in the short run but may be an issue in the medium term if demand is not able to cope with it. Even Chinese companies have learned that dollars are more important than tonnages. Accordingly, everybody needs to be careful when thinking about adding more tonnes.

Limited supply of Chinese steel is the biggest positive in the global market

GDP is improving worldwide, with the main economies performing quite well. Demand is stable in Europe, and multiple other markets are performing quite well also. That said, the limited supply of Chinese steel is the biggest positive in the global market. China is still holding back and it looks like it will not be back in the export market after the Chinese New Year holiday, which is certainly a very optimistic sign for the market.

Though prices weaken a little in Europe, EU and US drive global consumer optimism

Pricesin the European market have come down a bit due to weakening prices in Turkey and the strengthening of the euro. Nevertheless, the positive mood especially in the EU and US is giving confidence to long steel consumers worldwide.

Strong rebar demand in major consumption areas

As regards the short term, the situation has worsened due to the declines in Chinese steel prices and in scrap prices. However, the prospects in the medium term are brilliant because demand for rebar is strong in the major consumption areas. Hopefully, after the Chinese New Year holiday, the market will move again and scrap prices will rebound, pulling rebar prices up once more.

Wait for Section 232 outcome causes some uncertainty in US market

Demand has been steady in the US with the potential to improve in future months; however, supply in the US is limited. The unknown fate of Section 232 is holding back imports, giving domestic mills the opportunity to increase their prices. This situation may change quickly depending on the results of Section 232.

Reasonable demand and positive sentiment in major Latin American countries

Demand in the major Latin American countries is reasonable, accompanied by positive sentiment in relation to the forecast for 2018. Price adjustments may be seen in the very short term but still not affecting the interesting spread levels. Market prices are expected to trend upwards after the Chinese New Year holiday.

Scrap demand to remain at decent levels in EU and US

The long-awaited correction in ferrous scrap was seen in January despite demand being fairly stable. Decent demand in the steel sector will continue to keep scrap demand at decent levels for the coming month in the European and US markets, since the influx of imports is at subdued levels.

Prices for electrodes to remain challenging

Electric arc furnaces (EAFs) will be faced with challenging prices for electrodes not only in spot trades but also for longer-term contracts as supply restrictions mainly in China reverberate in the global market.The cost difference between blast furnaces and electric arc furnaces will bring scrap prices to reasonable levels.

Depreciation of dollar, oil prices above $65 and unchanged US Fed rates provide support

The weakening of the US dollar, which has depreciated by almost another four percent against the euro compared to one month ago – which means that prices in the EU have appreciated almost by $25/mt just because of exchange rate – continues to ensure that commodity prices are at high levels. Oil prices are above $65 a barrel and the US Federal Reserve has kept interest rates at unchanged levels. These are all positive factors supporting the current atmosphere.

Weaker US dollar and balanced world trade to keep steel and scrap prices elevated

The weaker US dollar coupled with the increased balancing of world trade will likely mean that prices for steel and scrap will maintain somewhat elevated levels as compared with recent years.

Competition is mostly at reasonable levels

Competition in the market is mostly at reasonable levels. However, mills’ margins are sufficient for them to be able to reduce prices to become more competitive if they have to. Currency fluctuations in late January made the environment somewhat challenging and will likely also have trade implications going forward.

Outlook for next quarter is satisfactory

The market can be described as mostly stable and looks set to continue like this, with some exceptions. The outlook for the next quarter is satisfactory.

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Conditions in the global long steel products market are slightly better as we can see a “better” supply and demand balance in China and the US due to output cuts at the end of 2015 and amid the restocking cycle in North America and Europe during the first quarter of 2016.  On the other hand, there has not been much  improvement on the demand side. Buyers are very hesitant and the retreat of raw material prices has not helped. The lack of improvement on the demand side suggests a significant risk for the aforementioned slightly better market scenario.

Global capacity utilization closer to 2009 levels than any year since

In terms of global steel production, capacity utilization figures are closer to 2009 than any year since then. Even in 2009 China roared ahead with good numbers and increasing tons, but unfortunately this is not the case in 2016. If the current average capacity utilization around the world is between 60 and 65 percent, such should be enough to create longer lead times and a slow rise in prices. However, this has not occurred yet.

Margins being squeezed to economically unworkable levels

Long steel product output is indeed decreasing but more output cuts still should and will be made, as plenty of offers are coming for every possible deal and margins are being squeezed to economically unworkable levels. The market might have hit the bottom or in other words entered the final phase, meaning this is the worst period that has been experienced so far.

Chinese steel exports continue to increase

China has seen an almost six percent drop in its steel consumption against which its steel output has only dropped by about two percent. As a result, total steel exports from China are up by another 30 percent. According to Worldsteel figures, world steel consumption is down by around two percent, whereas output is down by almost three percent. Since China represents almost half of the global steel output, this means the rest of the world has reduced output by four percent. The figures suggest that the Chinese mills are eating up the share of non-Chinese mills, with the backing of state resources.

Steel mill losses have become the norm

Nowadays almost every steel mill is announcing losses, including the Chinese mills. The situation with the Chinese mills is probably even worse than the situation of other mills worldwide, but it does not hurt them as much as it hurts the others.

Sharp surge in trade cases in 2015

Given the increasing losses incurred by steel mills, the number of trade cases exploded in 2015. Protectionism has become more prominent in different areas to safeguard domestic and regional producers from Chinese and Russian steel. More trade cases are expected until market forces will pressure them to slow down so that the world can reach a supply and demand equilibrium. Such a slowdown might be seen towards the end of the year if not the middle. Even if the impact of trade cases will not be instant, in the medium term we will see a stronger position for local mills in their respective markets.

Nevertheless, there are more homologation applications in progress than ever seen before. These applications suggest that blocking one single “enemy” will not stop the next one or will even widen the door. Local mills have significant problems in lifting prices in the short term because of such severe competition.

At the same time, China is receiving real “wake-up calls” from the rest of the world. Both the US and the EU are expected to announce trade cases against cold rolled steel coil imports from China.

Market sentiment depressed by poor world economic outlook

The worldwide economic situation does not give much hope either for a stimulation of and increase in demand, which seems to be the only chance for the industry to raise prices in the short term.

Current market prices at lowest levels since 2008 crisis

The current market prices are much lower than the lowest observed after the 2008 crisis. Oil prices at around $30 a barrel, iron ore prices at around $40/mt and scrap prices being where there are today make it quite difficult to cope and do business as margins are squeezed drastically. The fact that the outlook for iron ore is still negative allows no chance for scrap prices to move up.

Competition at peak levels in global long steel market

The level of competition in the global long products market is at its peak. As the market has shrunk, not alone due to global economic and geopolitical problems, but also because of antidumping cases, safeguard measures, Chinese exports and above all locally increased capacities in traditional markets, everyone – from producers to traders – is fighting to protect what they have and trying to get a fair share of the market. The competition is very strong especially due to Chinese and Russian suppliers. There is no economic logic in the competition currently observed. It is at unreasonable levels and is simply a survival issue for most steel mills.

Russian suppliers, Algeria, Iran, impact of oil prices and conflict in Middle East…

Russian suppliers at present hold a lot of advantages: cheaper ore, cheaper power, cheaper coal, cheaper labour, cheaper logistics, and a very undervalued currency.

The demand coming from Algeria is expected to slow down in the near future which will increase competition inside the EU market further due to a lack of alternatives.

Iran will soon be in the market and wants to export more steel, both flat and long.

The low oil price is restricting trade in some steel importing countries like Egypt and Algeria, but, in the meantime, it should help boost economic activities in developing countries. The situation in Egypt and Algeria is certainly not a positive for the market, and the worsening war in the Middle East is a negative. With geopolitical turmoil comes shifting trade conditions.

Under these circumstances, the market can be considered to be very unstable. Even though there has been a certain degree of stability lately, there are substantial downside risks in the global macroeconomic and political scenario that could impact market sentiment and jeopardize business conditions.

Cuts in steel output still on the slow side

Steel output is continually dropping, which shows that the industry is acting to take care of the problem. The speed is on the slow side as of yet though. Production cuts are forcing all players to make more careful calculations on their pricing system. The public is now more aware of the problems in the steel industry globally.

Poor financial performance forcing money out of steel business

The poor financial performance of the whole industry everywhere is causing money and investors to run away from the steel business. This will force new production reductions in 2016 even at a more accelerated pace than seen last year, and will help restore the supply and demand balance.

Billet remains an alternative to scrap  

Steel mills reliant on scrap have found billet to be an attractive alternative. Billet producers can sell billets in most places achieving a greater advantage than if they were to roll the billets themselves. With global growth being on the low side and oil prices sliding, freight rates hit all-time lows during January, which has pressured the pricing of goods on CFR basis even though dock pricing has been fairly consistent. Energy is also much cheaper.

Some positives in US domestic market

US domestic steel pricing has increased and domestic scrap pricing remains fairly steady.  Most stockists are short of inventory in the US market, where the economy is still on a positive trend. However, the expected production increase will take the advance out of pricing soon. If raw material pricing goes down in the US, this may be a further positive for the domestic mills.

Lower scrap prices in January may boost scrap market stabilization going forward

With lower pricing for ferrous scrap in the international market from January, demand for scrap has grown which may help stabilization of the scrap markets going forward.

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IREPAS chairman Kim Marti stated during his opening address that the main challenges the long products industry is facing are overcapacity and declining prices.

He said that in the next few months China may see a decline in steel exports because some private sector Chinese mills are experiencing financial problems. Mr. Marti stressed that steel is a cyclical business and that this could mark the turning point of the cycle. Regarding declining prices, he commented, “We are closer to the bottom.”

According to Mr. Marti, current economic conditions create both winners and losers. “On the losers’ side, we see emerging economies such as Russia and Brazil experiencing a slowdown, while developed economies such as the US and the EU are seeing an acceleration of growth,” Mr. Marti said. He went on to say that the EU economic sentiment index rose to 105.6 in September this year, the highest since August 2011, which indicates that the EU is overcoming its financial problems.

The IREPAS chairman also pointed out that Chinese economy is changing from being investment-led to being a robust, consistent economy which is based on domestic consumption, adding that he believes business has a bright future in China.

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 not bottomed out yet

The chairman of the raw material suppliers committee Jens Björkman from Stena Metal, said that the raw material markets were supply-driven, with a negative spiral seen in the scrap markets. He indicated that demand for scrap has followed a negative trend in the past few months, especially in Asia, pushing supply elsewhere and crowding the market.

Mr. Björkman pointed out that capacity utilization of steel mills has declined and this has affected scrap pricing since supplies have fewer destinations. He went on to say that intra-EU scrap demand was fairly steady, though it has slowed down in the past few months. On the other hand, in the EU scrap pricing was quite strong but declined during the summer period.

The raw material suppliers committee chairman said that prices have not bottomed out yet, adding that the decline in scrap prices in the US and EU is a result of lower scrap demand from Turkish mills. Mr. Björkman also said that lower prices will likely cause a reduction in scrap collection in the short term. Meanwhile, scrap supply from the Black Sea region, which is one of the main sources for some steel mills in Turkey, has dried up considerably.

Commenting on scrap usage predictions, Björkman said that scrap demand is expected to be fairly good but may be distributed over larger areas, and may not be concentrated as it was in previous years.

Traders discuss trade barriers and price trends

F.D. Baysal from Seba International, the chairman of the traders committee, said that some traders believe that there exists room for a small further price reduction, while the general consensus is that prices are at the bottom or pretty close to it.

Regarding the current situation in the US, the traders committee chairman stated that the committee members discussed whether mills are ready to produce new grades according to new ASTM standards. Mr. Baysal said that they also talked about the CARES’ (Certification Authority for Reinforcing Steels) suggestion that trading companies should be CARES-approved as well and whether this was another way of imposing a trade barrier. He pointed out that the traders did not subscribe to the suggestion. Commenting on another trade barrier, antidumping cases, Baysal said that not only the cases themselves but also the annual reviews create risks as well.

In answer to a question about whether the major iron ore producers’ increasing supply volumes constitute market vandalism, Mr. Baysal said he did not think it was market vandalism, but rather a strategy. “My belief is that when the smaller guys are out, the major producers can control the prices better. If the market turns against them, it might hurt them but I think it is a smart strategy. Once the smaller ones are out, it will be really hard for them to come back,” he concluded.

Steel producers: Global rebar demand is generally stable

The chairman of the steel producers committee and also the chairman of IREPAS Kim Marti said that there have been two significant changes in the market: Turkey has become a net importer of billets from being a net exporter and billet exports from China have increased significantly. He added that when sanctions are fully lifted Iran will probably enter the billet market, but it is not clear when.

Mr. Marti stated that the producers committee believes that the CIS and China will remain major billet exporters, though their export volumes will not indicate significant changes. Commenting on rebar demand, he said that global demand is generally stable, with markets showing differences depending on the region.

According to the IREPAS producers committee chairman, long products demand in Brazil has been negatively affected by the slowing down of the economy, also effecting the market in South America negatively, while in North America rebar demand stands at reasonable levels. Mr. Marti stated that the EU is still benefiting from lower oil prices, while demand from the construction industry in the region is recovering at the same time. Meanwhile, southern Europe is recovering, but production volumes are still low.

The committee chairman said that Turkey is the world’s second biggest rebar exporter after China, adding, however, that the export markets are shrinking in the Middle East because of political turmoil. On the other hand, the CIS markets are expected to stabilize in 2016 and exports will continue.

Trade for long steel products has been slower due to summer breaks in the northern hemisphere, although demand in Europe and North America could be described as reasonable for the season.

Oversupply remains biggest problem

Some oil producer countries are showing the effects of oil price reductions in terms of lower demand and currency devaluations that restrict imports. Oversupply is the biggest problem and is pushing prices of some products to levels irrationally unprofitable.

Chinese suppliers still aggressive, Russian and Brazilian suppliers doing their best

There is strong oversupply of iron ore-based steel products in the market. Aggressive competition from Chinese suppliers continues, but Russian and Brazilian suppliers are doing their best to take business. The market for EAF products is in greater equilibrium. However, as the market expects scrap prices to continue their downward trend, there is little reason for demand for EAF-based products to be more than hand-to-mouth.

China versus the rest of the world

Stable raw materials prices are helping to hold floor prices for finished steel products. However, this stability is set at a point where the price spreads between raw materials and steel products are very low. Competition in the market is still very severe and intense for those who have to produce and sell, mostly due to the strong competition with Chinese material in most regions. Back in the year 2000, the rest of the world’s steel output was 20 times China’s output. Today, Chinese output is equal to that of the rest of the world. Therefore, if we add one unit to Chinese side, we need to deduct the equivalent from the rest of the world to keep things equal. As long as China will continue increasing its presence in the international market, producers in the rest of the world will continue to suffer and trade remedies against China – such as the US is imposing – will be more common all around the world. As a result, business will become more regional.

Drop in oil prices should provide support for demand side

The drop in oil prices should lead to an accelaration of global economic growth as has always happened in the past. Most savings go straight to the pockets of consumers and this extra income is spent rapidly. In the meantime, governments of oil producing countries maintain their spending programs using financial reserves or by borrowing. Demand for steel should naturally benefit from this context, which will help the market overall, even though it may not be enough to solve the existing overcapacity problem.

EU stability and US growth are positive factors

The continuing stable situation in the EU area and the current level of demand in the European domestic market as well in as the US domestic market and the higher growth rate in the US are positive factors. US consumption will likely be boosted by lower energy prices and this will help growth but short-term challenges continue to exist.

Some positive demand signs but also hesitancy in ferrous scrap markets

As for ferrous scrap, the markets can be divided in different sectors. The Asian market is dragging the rest with it. The traditional scrap buyers are able to essentially run on Chinese semi-finished steel rather than operate their melt shops. All containerized scrap markets have seen prices come down to reflect the alternatives. US domestic scrap demand remains fairly strong as US steel producers are capitalizing on the downtrend of scrap prices, which reduces their costs and helps them to stay reasonably competitive.The European scrap market has stayed fairly stable, with prices falling on euro basis but not to the same extent as international US dollar-priced markets have. This is a reflection of the ongoing decent demand in this particular market. Scrap supply is decreasing with the price drops and this may help balance the situation somewhat. Strong currency fluctuations and uncertainties regarding conditions in China have been influencing the general sentiment over past months and have made the markets hesitant. The reelection in Turkey and the weaker Turkish currency have raised concerns regarding inflation and instability, causing postponement of demand from Turkish mills.

Many suppliers and fewer buyers in scrap markets

Scrap suppliers have experienced that demand has lessened and so crowded suppliers are trying to sell to fewer buyers. The more normal pricing differentials between markets has been altered in some areas due to anti-dumping duties on steel as well as decreased bunker fuel rates which shift competitiveness.

Discrepancy between scrap prices in Turkey and Far East

Price of container scrap is around $170-180/mt in the Far East, and there is a big question on how the $235 per ton price level can be maintained in the biggest import market which is Turkey. There has been an almost 10 percent drop to 650,ooo metric tons in Turkish rebar exports, while China has reached almost 2.5 million metric tons per month. Therefore, in the long run Chinese billet purchases may not be so helpful to Turkish mills as they are at present, and ferrous scrap prices may need to move in line with current billet prices. It is probably time for scrap to the break $200/mt level for Turkey.

Approach of year-end to have usual dampening effect on long steel demand

The outlook for the rest of the year is not very positive as seasonal effects are also expected to have their usual negative impact on demand for long steel products towards the end of the year. The highly oversupplied market seems unstable and unpredictable with difficult times ahead for many steel mills. We will probably see new antidumping cases inititated in several different markets. It will also be important to see which of the current antidumping cases will be successful and change the market dynamics.

European scrap demand remains fairly good and likely to improve

As for ferrous scrap, European demand remains fairly good and prices have fallen to a level which will likely raise demand for scrap. Lower supply will also help.

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