Demand in the global long steel products market continues to lag behind supply and the situation is getting worse because of China’s aggressive export policy. At the beginning of 2024, China accelerated its exports. Based on the data for the first two months of 2024, they are poised to exceed their record exports seen in 2015. Chinese steel producers seem to be making profits in each sale, with the lower iron ore and coke prices and lower energy costs in China. However, their long product exports are still far behind their  flat rolled exports.

Demand very quiet in Europe, may not improve until second half

The European market is still very quiet and Germany especially is one of the cheapest places on earth for reinforcing bars and wire rods. Demand in Europe has disappeared again after a slight improvement at the end of 2023 and it seems it will not get better before the second half. Cut and bend prices are at levels which do not even match replacement costs. It will probably take months before spreads return to normal.

Price fluctuations in the US, less liquid steel being produced

The US market is wobbling. Some prices are up, some are down. The US produced 600,000 net tons less liquid steel in the January 1-March 23 period this year, compared to the same period of 2023. Customers in the US, the EU and Canada are waiting for interest rates to ease and are delaying projects in the meantime.

Weak lira to continue to impact Turkish mills’ competitiveness

Turkey held its local elections at the end of March, with the economy set to slow down afterwards. The Turkish government is seeking to keep the current value of the Turkish lira and that will maintain the disadvantage for Turkish steel mills in terms of their competitiveness. However, Turkey may be helped in this regard by the political turmoil in the Middle East. (update on April 9th: How ever Turkey’s Ministry of Commerce has announced that it has restricted the exports of 54 product groups to Israel including  reinforcing bars and wire rods. Israel is among the largest markets for Turkish exports of these products)

Profit margins vary greatly, decisions on monetary policies awaited

Profits are being eked out here and there and in some places extraordinary profits can be noted. The market is waiting for positive signals from financial authorities in general.

Red Sea crisis reduces some competition

It is difficult to judge competition. Business is more regionalized and local competition exists. Some competition is absent due to the crisis in the Red Sea.

Market conditions unstable and difficult, huge uncertainty ahead from July on

Under these circumstances, the market conditions can be described as fluctuating unstably and difficult. The outlook for the market for the next quarter is complicated and challenging with huge uncertainty for July, August and September.

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

Longs demand in EU hit by variety of negative factors

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

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

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

Positive sentiment prevails in US longs market

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

Longs producers in US happy with prices and volumes

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

Interest rate cuts, if enacted, could give boost

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

Fears of recession and geopolitical uncertainties add to negativity

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

Competition becomes more and more local

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

Market status mostly stable but low, outlook is challenging

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

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