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 140 representatives from 47 different producers among the 493 registered delegates from a total of 58 different countries. There were also 100 registrations representing 57 different raw material suppliers.

At the opening of the conference, Murat Cebecioglu, chairman of IREPAS, said that the supply and demand balance in the global long steel industry is becoming more and more unstable. Explaining that Chinese finished steel products are dominating most markets, he noted that the situation is close to what the market went through ten years ago and stressed that, if the Chinese continue in the same way, the global steel industry will suffer great damage.

The IREPAS chairman added that the markets are in a bearish mood and are holding back with a not so promising outlook.

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: Previous optimism for H2 postponed to 2025       

Jens Björkman, the chairman of the raw material suppliers committee, summarized the finding of the committee meeting on the general situation in the global steel and raw material markets, noting that the optimistic sentiments seen in spring this year for the second half of the year have been postponed until 2025. Emphasizing that iron ore prices are under pressure from lower production in China, he stated that slowing Chinese production could work in favor of the rest of the world in terms of reduced Chinese export volumes.

Looking at the EU, pointing out that scrap generation in the region has slowed down as the sales of downstream industries have decreased amid lower personal spendings in the region, the chairman of the raw material suppliers committee noted that the lower scrap generation in Europe has led to scrap prices being stable at higher levels. He also commented that business activity in Germany, which is the main driver in the EU, is slowing down even though the year started with improvements in the construction and housing industries, the positive effects of which will be seen on the raw material side until the end of the year.

Regarding the situation in Turkey, Björkman said that the country has postponed scrap purchases during summer and autumn this year due to competitive alternative options of semi-finished products from Asia, especially China. He added that he expects Turkey to continue to purchase imports of billets, slabs and HRC, thus negatively affecting scrap prices.

Traders at IREPAS: Competitive Chinese billets pull Turkish mills away from scrap       

Wilhelm Alff, chairman of the traders committee, stated that China’s exports have been increasing constantly, with the country’s average monthly exports trending at 5.6 million mt in 2022, at 7.7 million mt in 2023 and expected to be around 8.7 million mt in 2024. Noting that China has been exporting semi-finished and finished steel products heavily at competitive prices, he stated that any surge in protectionist measures in reaction to this would just provide short-term relief, only changing product flow.

The traders committee chairman stated that, given the attractive prices of Chinese material, especially billet, Turkish mills are expected to continue to buy Chinese billet as an alternative to higher-priced scrap, putting pressure on scrap prices.

Regarding iron ore, Mr. Alff stated that rebar production in China has decreased amid destocking due to the switch to the new rebar standard, resulting in lower demand for iron ore. He said that iron ore stocks at Chinese ports currently stand at 149 million mt. Emphasizing the current spread between scrap and iron ore costs, Alff commented that everybody wants to be a blast furnace-based steel producer for the next six months.

Producers at IREPAS: Prospects for near future do not look bright

Murat Cebecioğlu, chairman of IREPAS and also chairman of the producers committee, said that, since China is the main driving force behind the global steel industry, everybody is unfortunately taking a position according to what China is doing. He pointed out that China is shipping semis and finished steel products to almost everywhere in the world, thereby putting pressure on prices and creating a huge supply and demand imbalance, while it is becoming even tougher for everyone else to compete.

Sharing the findings of the producers committee with the conference participants, Mr. Cebecioğlu said that producers in GCC countries are a little more optimistic than those in other countries as their economies are moving in the right direction, amid new projects, in Saudi Arabia for example, which are creating demand in the market, with the construction and real estate sectors being the driving force in the GCC region. Looking at the EU, the chairman of the producers committee said that business has seemed to be at a standstill in the region for more than a year now and hardly any improvement is expected in the next six months or so. On the other hand, Turkey is stuck in terms of export opportunities, being pushed into a corner by various protectionist measures, while it cannot sell to some Asian countries which used to be its main export destinations for long products because of Chinese competition. Commenting on the global longs market in general, Cebecioğlu said, “The near future does not look bright. We will probably see the same trend unless China stops exporting.”

Turning to the current situation in China, the IREPAS chairman said that, besides reducing production, the Chinese will also have to boost domestic demand, which is slow given the problems in the Chinese real estate sector. He went on to say that just reducing production by itself will not be enough, the government should provide some stimulus program as well. Regarding Turkey’s billet imports as an alternative to scrap, he said that Turkish mills will buy less scrap, complementing their needs with billet imports from China, which means they will be producing less semis, and this situation may also exert some pressure on scrap prices.

The global long steel products market is becoming even more regionalized. All the safeguard measures, tariffs and antidumping and countervailing cases are reducing the global exchange of products more and more. The Covid-19 pandemic gives producers in certain markets the pretext to lobby their governments with even more arguments to get their domestic markets protected for no reason, but politicians just go along and accept this constant pressure as the public is not really focused on such ‘minor’ issues nowadays.

China’s imports start to slacken, it could eventually revert to being a net exporter

China has lately been reducing its purchases of pig iron, HBI, slabs and billets. However, no major change is expected in China at least until after the Chinese New Year holidays. That said, the margins in the Chinese domestic markets have been reduced and expectations are that China will shift from being a net importer to being a net exporter during the next four months.

Possible lifting of China’s scrap import ban could strongly impact global scrap prices

There are also reports that Beijing will allow the import of ferrous scrap with fewer restrictions. The last time China was a significant player in the global ferrous scrap market, it purchased about 14 million metric tons in a single year. Of course, China is a much larger producer, with more EAF-based production now. In the event of China lifting its scrap import prohibition, global scrap prices could increase significantly in view of the large EAF-based capacity the country has recently built up.

2021 will hopefully be a recovery year

On the other hand, next year will be a recovery year globally after all what we have been through in 2020.Accordingly, demand is expected to be relatively good. Of course, the EU and US producers are enjoying full protection, while, as far as Russia, Ukraine, Turkey, Iran and Brazil are concerned, all depends on China.

Some negative signs in the US

In the US, the market situation is worse. Demand is relatively unchanged, though it has been coming under new pressure from Covid-19. On the other hand, the US mills are constantly adding capacity which is not fully utilized, and so supply is increasing. Imports have thin margins, if any.  Domestic scrap prices have moved up again, for no solid reason, which means they will probably be forced down again this winter. Now that Biden is elected as President, there is hope for eventual withdrawal of Section 232 safeguard measures.

Post-Brexit quota reductions announced by EU

The post-Brexit quota reductions have been announced by the EU, and the ‘global’ and ‘international’ volumes seem to have decreased slightly.

Prices in US and EU improve, many countries able to compete with Chinese in Asia

Prices in the EU and US markets have been improving. Despite the recent slowdown, China is still a net importer and does not pose a real threat to exporters in the rest of the world. Even better news is that exporters in countries like Russia, South Korea, Vietnam, India, Brazil and Turkey can compete with the Chinese exporters in Asian markets. However, there is a strong caveat: China has increased its production to over 1 billion. As a result, the world market will be under pressure when its GDP slows down over the winter months.

Competition levels decline worldwide, except in US

The level of competition in the global market is getting lower and lower due to more and more market protections, and competition can be described as relatively slack with the exception of the US market where it is still high.

Global market situation and outlook stable, except for US

The current status of the market can be described as stable, yet again with the exception of the US market which seems to be unstable. The outlook for the next quarter is mostly satisfactory, except for the US market at present.

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The US was threatening to reimpose the 25 percent safeguard duty on imports of Brazilian steel and the 10 percent tax on imports of ex-Brazil aluminium. No official document has yet been released by the US on the issue.