There were 223 producer representatives among the 918 registered delegates from a total of 70 different countries. There were also 69 registrations representing 31 different raw material suppliers.

At the opening of the conference, Murat Cebecioglu, chairman of IREPAS, emphasized that the supply was no longer an issue in the global long steel products market, and demand would be the driving factor from now on, though it would probably be rather slow for a while because prices are normalizing and delivery periods are becoming shorter. He also added that the cost of producing steel is increasing, especially on the energy side.

IREPAS chairman also said the logistics situation is getting worse in terms of constituting a bottleneck. Furthermore, the strong surge in electricity costs, which have tripled or quadrupled since August this year, has tightened the pressure on many mills, meaning they have to seek to pass on cost increases to their customers, he added. Mr. Cebecioglu also said that the outlook for the market in the next quarter is much more positive than it has been seen for some time despite several uncertainties.

Raw Material Suppliers at IREPAS: Scrap demand level is very supportive of the market

Jens Björkman from Stena Metal International, the chairman of the raw material suppliers committee, commented on the performance of the steel market and stated that general conditions are expected to improve amid quite substantial support from governments for a rebound after lockdowns. “We will continue to see markets resuming to more normal circumstances next year. We expect the markets to perform well,” Mr. Björkman noted.

The raw material committee chairman pointed out that China is planning to cap its steel production in the first quarter at lower levels, meaning that demand for raw materials will also remain limited. As a result, demand in China will be slightly lower during the first quarter next year.

Commenting on the scrap market, especially in Turkey, Mr. Björkman said that seasonally the October-November period is normally a very strong production period, with strong prices also. He added that, with continued strong production, the demand level is very supportive of the market. Regarding threats of scrap bans from certain countries and regions, the Stena official commented, “The risks of that happening are pretty mild, as it is such an important trade”.

Answering a question about financing of the raw materials trade, the raw material committee chairman underlined that, in terms of trade finance, such as letters of credit, there is no shortage of financing, while, on the other hand, there are some issues regarding credit insurance when selling material to the EU market or the domestic market. “Credit insurance, i.e., the ability to cover credit with insurance, has been very difficult during the pandemic and also the post-pandemic period. We are seeing some signs that it might get a little bit better as raw material buyers are performing better and are actually delivering very strong quarterly and annual results, which alleviates the situation for insurance. However, in general it has been a slow rebound so far,” Björkman said.

Traders at IREPAS: Prices will not decrease at least until Q2 2022

F. D. Baysal from Seba International, co-chairman of the traders committee, answered questions during a panel discussion. Mr. Baysal said he believed that there is definitely a genuine recovery. He pointed out that steel production slowed down just to adjust to demand, not because the mills were not able to maintain production, but because most mills are run in an automated manner and are capable of working with minimum staff.

Commenting on the outlook for EU imports, the traders committee chairman said that demand for imports in the EU has been strong for some time and will continue, though imports face other limitations: for example, specifically for rebar, homologation and quotas are the limiting factors. “The Turkish rebar quota opening on October 1 got consumed in a single day, with many importers still holding back significant volumes to clear customs as of January 1. Also, significant imports from other developing countries are not realistic, as it takes time to qualify due to homologation procedures which can take up to 15 months,” Mr. Baysal said.

Regarding the recent surges in energy costs worldwide, he pointed out that energy price increases may be permanent, but that the surge seen recently is definitely temporary. He said that in 2008 and 2014 energy prices were even higher than today, but in subsequent years they moved down and even collapsed during the pandemic, resulting in many postponed drillings, production halts, and shutdowns of coal plants. “Going forward, all it takes is for Russia, Saudi Arabia and the US to increase production, and pricing will go back to normal levels again. Obviously, the nations who are importing their energy will be affected the most,” he suggested. He also commented on the situation regarding freight rates and said that the current levels are not a new normal, but they will not go down in the next few months either.

Addressing the issue of the trade talks between the EU and the US, Mr. Baysal said he believed that nothing has changed regarding US trade policy, but things are rather getting worse or staying the same, instead of getting better.

During a discussion on whether China would return to the export markets or otherwise, the traders committee chairman shared with the conference participants a rumored report that the Chinese government is mulling an export tax on steel starting from January 1 next year.

Finally, Baysal commented on current steel price levels and on whether they are here to stay: “Yes, prices will not decrease any time soon, at least not until the second quarter of 2022. Scrap prices decreased a little last month, but shipping prices continued to double or even triple, keeping steel prices at the same levels. High energy costs will continue to negatively affect steel prices. If China continues to decrease production and stay away from the export market, high steel prices may continue for a long while yet. However, in the long run, I think neither shipping prices nor raw material prices will stay this high.”

Producers at IREPAS: Markets have never been better, great time to be in steel business

Michael Setterdahl, from GFG Alliance – Liberty Steel Mills, member of the producers committee, said that it is a great time to be in the steel business.

He went on to say that the markets have never been better and that the first quarter of 2022 will be excellent, as long as China does not start increasing exports, while pointing out that steel consumption is growing at a higher rate in the rest of the world than in China.

Considering that the extra increases in steel production costs amount to €120/mt, Mr. Setterdahl indicated that, in the medium term, there will be CO2 charges or taxes and that there will be surcharges on all products. He said that right now, steel has surcharges on ferroalloys, but there has been very little reference to natural gas or electricity in the pricing of steel. Commenting on energy costs on the other hand, the Liberty official underlined that the EU and emerging markets will be affected the most because they are importing energy. He also noted that increases in electricity from wind power and solar power are expected, but these will be incremental increases, not immediate as in the case of coal energy.

According to Mr. Setterdahl, demand in China is slowing down, with the Chinese demand growth forecast dropping from 6.5 percent to 4.9 percent. “As inventory levels are going up and as Chinese regulators are concerned about the increase in prices for residential buildings amid expensive rebar and cement, I think there is a political push in China to reduce demand,” Setterdahl noted. In response to a question on whether China would resume exports, he said that Chinese mills may want to turn to the export markets to maintain their volumes with domestic consumption slowing down, but Beijing will not allow mass exports, he noted, explaining that 20 million mt of steel exports out of China may be tolerated but, if the figure goes up to the maximum amount of 65 million mt registered a few year ago, Beijing will take action.

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

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

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

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

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

Raw Material Suppliers: Scrap prices have bottomed out soon after Rome meeting

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

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

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

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

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

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

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

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

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

Steel producers : Exciting times finally here after depressing period

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

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

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