The business environment in the global long steel products market, particularly in terms of the demand and supply balance, has not improved meaningfully. Other than that, the situation has worsened as the Trump Administration’s increase of US import duties up to 50 percent caught many exporters off guard. The uncertainty created by the Trump administration by doubling tariffs is terrific for those who are protected and terrifying for those under attack. These sudden changes in duties and tariffs make exporters to the US think twice about exporting and make it very difficult to come to a decision.

Buyers wait and see as outcome of talks awaited

Rumours about talks with Mexico and Canada and other countries’ approach to the US administration to see if they can obtain an exemption in any sense have put buyers into wait-and-see mode. On the other hand, huge debates and negotiations are being carried on between suppliers, receivers, and traders about who should be responsible for the extra burden for those cargoes which arrived at US ports after tariffs were raised to 50 percent.

Importers into US face serious difficulties

Importers into the US continue to face serious challenges, especially with cargoes already on the water or ready for shipment under L/C terms. Many are forced to either absorb heavy losses or cancel shipments altogether.

Prices creep up in US due to new 50 percent tariffs, consumers frustrated

In the US, demand remains moderate, but prices have started to creep up – largely due to the protection of the newly imposed 50 percent duty on all steel imports. Despite this, domestic prices are still not strong enough to justify new import orders. Meanwhile, persistently high interest rates are discouraging new investments and slowing down construction activity. In summary, aside from a few US domestic mills benefiting from the current trade environment, most steel consumers and processors remain frustrated with the situation.

Impossible to compete with exports from China and SE Asia

Elsewhere, it is not possible to compete with exports from China and Southeast Asia. Stimulus programs to help the market in China have not been effective at all. We can assume they will keep exporting heavily, which will mainly hit the other exporters in the region.

Europe flooded with cheap imports, regional mills face high costs

The weak dollar and displaced tons from Asia have encouraged imports and so Europe is flooded with cheap imported steel, while energy costs for European mills have gone up. Buyers have taken early and extended holidays, but scrap prices stay high. European mills are not able to cover melting costs. Unless demand picks up after the summer break, production cuts are likely.

Expectations of interest rate cuts provide some glimmer of hope

There is still some hope among market players that some of the recently announced tariffs will backfire. Expected interest rate cuts may be the only positive so far. However, it seems the US Federal Reserve will wait a little longer to see the impact of tariffs on inflation. Interest rate cuts are also expected in Turkey, though demand there is still low. The only activity is seen in construction in the earthquake-hit region and in the renewal of old buildings.

Market status unstable, short-term outlook unsatisfactory

The current status of the market can be described as unstable and the competition in the market is very strong all around. It is very difficult to predict the outlook of the market under the prevailing uncertainty created in the market. The market is structurally weak. Nothing will probably drive the market during July and August until the start of September. Accordingly, the short-term outlook for the market is unsatisfactory.

DO YOU AGREE OR DISAGREE?  

PLEASE LEAVE A COMMENT AND SHARE YOUR OPINION WITH US        

The global long steel products market is oversupplied and overcrowded. The situation has worsened and is now structural. The competition in the global market is predatory.  Margins are dead. The only strategy is cashflow and turnover. Whoever can ship first, wins. Whoever negotiates for $5/mt more, loses the order. Every confirmed business is a major success. Moreover, without the US market, competition may become brutal.

Latest US blanket 50 percent Section 232 duty marks unprecedented shift

The latest US decision to impose a blanket 50 percent Section 232 duty on all steel imports marks an unprecedented shift – one that severely impacts importers while handing a windfall to domestic producers. Although there was previously a similar measure targeting imports from Turkey, this universal application is unparalleled. What makes this especially jarring is its immediate enforcement, affecting cargoes due to arrive soon, offering no transition period or due process. This abruptness feels inconsistent with the values and principles we have long associated with the US marketplace – predictability, fairness, and rule of law.

New US decision cuts its market off from rest of world, importers handed long vacation

If the 50 percent Section 232 duty holds, it may ironically render the US the most expensive steel market globally, shutting it off from the world at a time when collaboration and balance are most needed. It seems importers in the US have been handed a long, scorching summer of vacation, just as they brace to absorb the financial fallout of all US-bound cargoes. These are extraordinary times and must be navigated with clarity, unity, and resolve.

Demand still weak in Europe and Turkey, with imports putting pressure on prices

Demand is still soft in the European market and imports are putting a ceiling on any potential price increases. Unless there is an actual pickup in end-user consumption, prices will hover at current levels or drop, especially if more cheap Asian billet flows in. Demand in Turkey is still lacking also, but more important is that, with the current iron ore and coal prices, there will be more supply pressure from Far Eastern and Southeast Asian suppliers. Far Eastern and Southeast Asian origin steel billet prices are going down almost every day.

Scrap-based producers falling behind in terms of costs

Scrap-based producers are getting priced out. Billet from Asia is cheaper than melting scrap. There is almost no point in running a melt-shop when you can just roll. This shift reshuffles power, as cheap billet exporters win and EAF-based mills are now considered high-cost producers.

Chinese long steel exporters start to push out Southeast Asians

Southeast Asian mills, who had dominated the market, are now being quietly pushed out by China. Chinese long product exports surged by over 100 percent year on year in the first quarter of 2025. Reduced blast furnace costs, falling domestic demand, and export subsidies mean this wave of Chinese exports will not slow as it is policy-driven, not market-driven. A serious displacement is taking place. Vietnam, Malaysia and Indonesia are all fighting for markets. Even South Korean mills, who were deemed to be bulletproof previously, are now closing lines for the first time in decades. China is stable, but prices are not going up and their steel is cheap, hoping for new export markets. Oil prices are also weak which is good for some players in the steel market, terrible for others.

Market currently very unstable, outlook unsatisfactory, seems to depend on political decisions

The market is currently very unstable. No one is making money. Everyone is quoting, but very few are actually booking orders. The outlook is unsatisfactory and seems to depend on political decisions.

OECD: Some brighter prospects in ASEAN and MENA regions

The recently published OECD Steel Outlook 2025 states, “Demand in the OECD area will remain roughly constant, while Chinese demand will decline appreciably due to the downturn in construction and structural shifts in China’s economy. Prospects are brighter in the Association of Southeast Asian Nations (ASEAN) and Middle East and North Africa (MENA) areas, where demand will grow strongly.”

DO YOU AGREE OR DISAGREE?  

PLEASE LEAVE A COMMENT AND SHARE YOUR OPINION WITH US        

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

European market still extremely quiet after the holiday period

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

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

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

Situation in North America quickly becomes positive

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

Question mark remains over demand in Latin America amid political instability

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

All Turkish mills are struggling to export

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

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

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

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

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

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

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

Temporary absence of Chinese export offers amid local market improvement

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

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

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

Competition again becomes more regional

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

Current status of market still unstable and fluctuating

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

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

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

Market outlook remains unpredictable and challenging

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

DO YOU AGREE OR DISAGREE?

PLEASE LEAVE A COMMENT AND SHARE YOUR OPINION WITH US

Demand in the global long steel products market is either very low or there is no demand at all, depending on the region. Overall demand is less than real supply and possible supply increases. The demand for ferrous materials has also slowed down considerably as industrial outlooks have lost visibility. Energy cost uncertainty and the destruction of demand have led to order cancellations. Demand is not expected to improve in the coming months and therefore operating under current conditions is not sustainable for the steel industry. More closures will follow in the coming months especially for those who also suffer from the consequences of the war in Ukraine.

Chinese traders start to short the market

Customers are delaying purchase decisions while Chinese traders are shorting the market. Steel mills are in trouble and even those in Asia are entering the red zone. Energy prices have been softening thanks to the warm weather but may go through the roof again at any moment.

Private sector construction activity in EU almost completely dried up

Private sector construction activity has almost dried up completely in the EU market, which places small and medium-size cut and benders in real difficulty. Industrial and public projects are still available in good volumes, but everyone is fighting for them now and undercutting prices to an extent we saw at the beginning of the pandemic when some market participants believed prices would fall through the floor.

EU mills doing everything to maintain prices at certain levels

However, domestic mills in the EU are doing everything to maintain prices at a certain level and, even if they have reduced sales prices a lot in the last couple of weeks, their clear aim is “profit before volume”. The uncertain situation for mills in relation to gas and electricity bills remains unpredictable, which makes it difficult to push prices down. However, more pressure is coming from imports. Demand for construction, on the whole, is still good in Europe. At least in Germany, demand is still good despite the pressure on prices. Those who have full order books are in a good situation and can sit and wait if they have covered their needs.

US market outlook becomes more unknown and negative, mills still see record profits

In line with the general international market, the US market has also changed to a more unknown and negative outlook. With the expectation of raw material prices coming down, there is an expectation that all pricing will undergo a correction. With this expectation and the approach of the end of the year, most service centers are reluctant to replenish their inventories. The steady rise of interest rates also increases the expectation for a slowdown in the economy and in future construction, especially housing and commercial construction. Although all pre-financed projects are keeping demand high, the future is more uncertain, especially after the mid-term elections in early November. Unemployment is still very low, making it difficult to find qualified workers both at warehouses and ports. Ports are still very congested, making cargo movements even more difficult. Protectionism is on the rise even with this administration, with so many roadblocks at every step to discourage imports. In spite of all such negative developments, the US mills are still turning in record profits, even though the July-September quarter showed less earnings.

International market under pressure from very aggressive prices from Asia

In general, market prices are under pressure from Far East and Southeast Asian mills who are being very aggressive. The GCC countries are also offering very low prices which makes it impossible for Turkish producers to compete in the long products market. Even the Turkish market has become a battlefield for some exporting countries like Russia, India and China for some other products. The coming holiday season will probably make things worse. Turkey has been squeezed between low-priced semi-finished steel products and a stronger India than normal. In China, iron ore prices have fallen to two-year lows amid renewed fears of more Covid lock-downs.

Freight rates become more predictable – a positive development  

Freight rates are becoming more predictable, which may be considered as more good news for the market. Logistic costs are slowly moving towards “normal” but are still at high levels. At least the availability of vessels, barges and trucks is better now.

India still shows strong appetite for raw materials

Moreover, lower ferrous scrap flows have mitigated demand cuts to some extent. India has also had a strong appetite for raw materials for some time and this is expected to also continue well into 2023.

Competition still very high, except for US and EU which remain protected

There are still different global markets from the point of view of competition. The US and the EU are protected and not part of the competition in the global market. Competition is very high elsewhere, particularly in the Middle Eastern and Far Eastern markets. China has been more and more aggressive lately and offers of semi-finished products out of the Gulf region are very competitive. Freight rates are the only factor limiting competition in faraway markets.

Current market situation and next quarter outlook both unstable and negative

Under such circumstances, the current situation in the global long products market may be described as unstable, while more negative news continues to come from Russia’s war in Ukraine. The outlook for the next quarter is also unstable and negative. The January-March period may be worse than the height of the pandemic, driven by lower prices in Asia and continuing impacts from the ongoing war in Ukraine.

DO YOU AGREE OR DISAGREE?

PLEASE LEAVE A COMMENT AND SHARE YOUR OPINION WITH US

At the opening of the conference, Murat Cebecioglu, chairman of IREPAS, emphasized that the situation in the global long steel products market is deteriorating as we have entered a rising-cost business cycle, adding that the situation is dramatic and huge uncertainty lies ahead.

The IREPAS chairman said the current crisis is a once-in-a-generation event with mills and consumers facing an unprecedented increase in energy prices, particularly in the EU, but also almost everywhere else. In addition to the energy crisis, there is also a logistics crisis, he said, adding that production cuts are expected soon, which will balance the drop in demand caused by higher interest rates and costs, as well as by shortages of many items.

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: Lower scrap demand prevails in market, except in South Asia

Jens Björkman, the chairman of the raw material suppliers committee, summarized the committee meeting findings stating that energy prices, especially in the EU, were the main topic of the conference. He added that during summer and autumn all-time record high levels were recorded for natural gas and electricity prices. The committee chairman indicated that interest rates have been hiked to tame inflation, pushing the US dollar to an all-time high against other currencies.

Commenting on scrap demand, Mr. Björkman said that US scrap demand had slowed down and that mills there are running at slightly lower capacities, pressuring scrap and iron ore prices, adding that supply of new production scrap which was previously in good shape has been slower. Also, for China, he noted that, despite a significant stimulus, demand for steel and raw materials has been weakening, with the outlook remaining negative. Scrap demand is significantly lower in some parts of the EU, and this has been offset by Southeast Asian demand where energy problems are not so severe. Also, logistics are another issue for the EU market given the all-time low water levels on the Rhine River, as Europe’s river system is an important part of the EU’s scrap exports.

According to the chairman of the IREPAS raw material suppliers committee, the demand situation in Turkey, which has also been struggling with high energy prices, is under pressure from alternatives to scrap such as semi-finished products, which it has been possible to get at lower price levels. Mr. Björkman explained that Turkey is not only buying Russian billet, but also ex-Asia billet, and that the pressure coming from cheaper billet is affecting Turkish mills’ ability to buy scrap. He added that, thanks to the alternative destinations for scrap such as some Asian countries, the pressure on prices in the market which Turkey was able to exert has been mitigated, though these alternative destinations are not likely to become permanent markets, and so Turkey will maintain its role in setting a benchmark in the international scrap market.

Regarding the possibility of a ban on scrap exports by the EU, Björkman said that it is becoming a likelihood and that any potential ban seemed to be targeting non-OECD countries at first, but now OECD countries seem likely to be included as well. The European Parliament will vote on a ban on November 17 and it could come into force in 2026. He added that the scrap tonnage recycled in the EU is too large; even if a few million tons will likely remain in the EU, the rest will need to find other markets.

Traders at IREPAS: Trade routes are changing due to both war and energy crisis

F. D. Baysal, chairman of the traders committee, commented on the changing trade routes for Russian steel after the start of the war in Ukraine, indicating that Russian steel is mostly going to China, Egypt, Taiwan and Turkey, and “to our surprise 3.5 million mt of Russian slab is still going to the EU, to the mills that are Russian-owned”, he added. He went on to talk about energy prices, another topic of heated discussion throughout the conference, pointing out that the EU is affected the most, but even within the EU not every country is affected to the same extent.

According to Mr. Baysal, in Germany the cost of energy stands at $470/MWh, while it is at $200/MWh in Spain, which is similar to Turkey. Although energy prices have risen worldwide, there are countries with serious advantages like the US, an exporter of gas, GCC countries, and also China, since they are getting Russian gas, as he reminded participants.

The committee chairman said that the traders committee does not expect a lot of changes in the EU policy regarding steel import quotas for Turkey, “I don’t think EU mills will allow that,” he added. Mr. Baysal indicated that some suppliers such as North African countries and the UAE are now exporting to the EU and will eventually gain some market share in the region. He stated that the markets for Turkey are limited, Turkish supplies are mainly taken by countries that are not as much affected by the energy crisis like China or India. Apart from this, access to the US market is limited due to Section 232 and to the EU because of the quota.

Regarding steel imports into the US, Baysal said he does not expect a huge increase in imports, as there is not a strong increase in demand, while he added that there are countries that are exempt from Section 232 like Mexico, Canada and the EU, though  EU has a disadvantage in terms of energy.

Answering a question on semi-finished steel imports from Southeast Asia to Turkey and Europe, the traders committee chairman said that he does not think it is going to be permanent, as, when energy costs go back to normal, the EU will buy from its traditional sources. However, he admitted that North African countries such as Egypt and Algeria or GCC countries such as the UAE will gain some market share in the EU and may be able to hold on to it.

Producers at IREPAS: Energy prices and inflation put pressure on production

Murat Cebecioglu, the chairman of IREPAS and of the IREPAS producers committee, informed the participants about the situation in certain countries, stating that many countries have been negatively affected by inflation rates, energy prices and declining steel production, while the US market remains stable, with its imports going down, an increase expected in its rebar consumption amid new infrastructure projects, and more capacity coming from domestic micro mills. He also noted that, in some other countries such as Qatar and Kuwait, the situation seems a bit better with some infrastructure projects planned.

Commenting on declining steel production, Mr. Cebecioglu said production cuts are already seen which will probably balance the drop in demand, though huge uncertainty remains for the next few quarters, also fueled by some political issues, adding that doing business will be extremely difficult not only in the EU, but elsewhere also.

He went on to say that for Turkey energy costs are the main issue causing a reduction in production and uncertainty is not helping mills to make long-term plans.Regarding Turkey’s sales prospects, “Right after the start of the war, Turkey was able to sell huge quantities to the EU, but now the EU has found other sources that are not included in its quota system,” the committee chairman noted. He underlined that, today, with Asian countries such as Malaysia and Indonesia selling to the EU with CFR prices which are lower than Turkey’s FOB prices, “there is no way Turkey can compete”.

Answering a question regarding the disturbance caused in the markets by Russian supplies, Cebecioglu commented that, from 2024, Russian slab and billet will be banned in the EU and Canada’s announcement that it will sanction any imported steel produced from Russian material causes hesitation to use Russian material. He added that Russian exports are disturbing prices in many markets and producers globally are suffering, with only limited markets remaining for sales opportunities.

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

Sanctions on Russia to continue for some time to come

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

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

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

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

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

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

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

Supply and demand stable in the US

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

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

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

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

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

Competition from Asian mills increases gradually

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

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

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

DO YOU AGREE OR DISAGREE?

PLEASE LEAVE A COMMENT AND SHARE YOUR OPINION WITH US

Demand is picking up in the global long steel products market after the holidays and it will be even better once the weather becomes warmer in the northern hemisphere. It seems the market is getting back to normal. Section 232 is practically over. General demand is strengthening with the pandemic possibly coming to an end. Bottlenecks seem to be easing somewhat, such as breakbulk freight rates, which have returned to more normal levels. International trade has resumed, bringing confidence to the market. Covid restrictions are being removed. At some point, automakers’ chip shortages will come to an end and this will boost car manufacturing. Market players are looking forward to seeing how raw material prices will settle this week after the Chinese holiday, though the situation so far seems to be positive.

Integrated mills still hold an advantage over their EAF-based counterparts

Steel consumption is still excellent around the world, while the ferrous scrap market has strengthened since the New Year. Input costs for both integrated and EAF-based mills have increased in a similar fashion. However, the advantage still lies with the integrated mills. The relatively high prices for ferrous scrap, along with increasing prices for non-ferrous scrap, are expected to keep the flow of obsolete scrap at elevated levels. Raw material demand is increasing and is expected to drive costs everywhere, along with energy, with EU steel producers contributing significantly to this increasing raw material demand.

Steel producers start announcing green initiatives

Global attention is shifting to steel producers announcing green initiatives, and so now we are all on a three to four-year road to change. Green changes are primarily for local and somewhat regional markets.

Spread between rebar and hot rolled flats mostly returns to historical normal level

The spread between reinforcing bar and hot rolled steel sheet in coil prices is returning to the historical normal level of less than $100/ton in every region, except the US and Canada.

Energy costs remain biggest issue facing producers

Energy is still the biggest issue nowadays facing producers and costs are double compared to the previous year with energy prices reaching all-time record high levels. Costs of raw material will also be another item to deal with. The geopolitical situation is also unstable.

Demand reasonable for EU mills, supported by mild winter weather

Demand is reasonable for EU mills as there are some serious projects in the Mediterranean region. The extremely mild winter in Europe has not interrupted construction yet. All yards are running at 100 percent and mills are nicely booked with orders. Building companies are still trying to push cut and benders down with prices, but the resistance of more and more benders gives hope that bending prices will rise very shortly. Almost every EU market is performing well, and imports are more and more regulated or are not available. Buyers have almost no option. International demand is also either going up or is strong at least, despite the winter season.

Prices soften in US, contrary to global trends

However, the situation is very different in the US from that in the rest of the world. While the rest of the world is experiencing price increases, prices in the US are still softening. Though the US market is coming from much higher prices, the further softening of prices is confusing. Demand is still strong, but the fear of further price reductions keeps distributors from making future commitments. After the EU, the lifting of the Section 232 measures from Japan may not help expectations. However, if the reduced quotas are also applied to Japan as was done in the case of the EU, the effect may be minimal. The US-EU agreement on the removal of tariffs has strengthened EU demand, though it has been a slight negative for US producers during the past month. Expectations in the US are for price stabilization soon and slow price increases to follow due to the inevitable high inflation with low interest rates.

China to produce less steel in 2022, good news for other producers

China has stopped increasing steel production and Beijing’s policy is to produce 100-150 million tons less steel in 2022 than in 2021. Steel demand is still strong in China and exports are not of real interest to them. Chinese steel exports are firmly below six million tons per month. Furthermore, the Chinese government seems to be proposing more infrastructure investments. If China does not produce as much as it did in 2021 and if exports do not increase, then all other suppliers will have the chance to export to Southeast Asian and Far Eastern markets as well. Another major positive is that, if less steel is produced, it will create a mini boom in import demand from mainland China. Also, China’s stimulus in December brought production back in line after the Evergrande debacle, which boosted sentiment.

Levels of competition are reasonable, Turkish mills struggle to compete in Asia

The levels of competition in the market are reasonable. The competition in the reinforcing bar segment is between Asian and Gulf countries as it seems that Turkish mills have difficulty competing at the buying prices seen in Asia.

Outlook very good for an overall strong market

The current status of the market can be described as very stable and strong, perhaps with the only exception of the US for the time being. The outlook is very good and satisfactory.

DO YOU AGREE OR DISAGREE?

PLEASE LEAVE A COMMENT AND SHARE YOUR OPINION WITH US