IREPAS : Business is expected to resume within a short period

The 63rd meeting of IREPAS (International Rebar Exporters and Producers Association) was held in Madrid on October 3-5, 2010. There were 85 producer representatives amongst the 272 delegates from 42 different countries.

At the conclusion of the event, the chairmen of the committees for raw material suppliers, traders, rebar and wire rod suppliers and billet suppliers came together to share their view of the current state of the markets with the general participants at the meeting.

The Traders Committee chaired by Mr. Wilhelm Alff (Director-Stemcor AG), concluded that the demand in the US and in the European Union is very weak, especially for rebar and wire rod; in Europe inventories are low, and considering price volatility, consumers prefer to purchase from local suppliers but in limited volumes; and despite the efforts of the EU mills to reduce production to only 40 – 70 % of their actual capacity there is still an imbalance between production and demand. Mr.Alff said that even some new capacities will appear in the near future which will increase the necessity for existing mills to reduce production level further unless demand will increase substantially. He added that limited credit insurance increases risks for traders and limits trade volumes, and the fast growing Latin American markets, particularly Brazil, create opportunities for traders provided governments in the region do not take measures to limit imports.

Chairman of the Raw Materials Committee, Mr. Ioannis Meimaroglu (President-Helveco Intertrade SA), said that confirmed scrap exports this year will be at lower levels compared to 2008 and 2009 and at the same time the supply of scrap is expected to be less than demand. Given the question about what the scrap prices will be, Mr. Meimaroglu underlined that the replacement cost is the main issue for scrap suppliers. He warned that, pushing scrap prices further down would only result in decreasing the scrap quantities available, and that it is a very bad period to push scrap prices down.

Mr. Uğur Dalbeler (Managing Director-Colakoglu Metalurji AS), chairman of IREPAS and also chairman of the Billet Suppliers and Producers’ committees said that Russia, Ukraine and Turkey are the main steel billet exporters, while Russian and Ukrainian billet exports have declined as their domestic markets have strengthened. On the other hand, Turkey increased its billet exports by more than 75 percent year on year in the first eight months of 2010, since its rebar exports decreased by almost 40-45 percent in the same period. Mr. Dalbeler stressed the significance of the weakness of the US dollar, which limits price increases. Dalbeler also said that the approaching winter will limit scrap availability. However, he said that the lack of activity can be seen as an indication of an imminent increase in activity, and thus the outlook is still positive. On the billet side, Mr.Dalbeler said the conclusion of the committee is that no downward trend is expected despite the silence of the last three or four weeks. Business is expected to resume within a short period, the committee concluded.

The chairman of the Rebar and Wire Rod Producers’ Committee, Mr. Mohammad Al Saadi (Marketing Manager-Qatar Steel), said that levels of production activity vary according to the region. While Europe is weak in this regard, Latin American market is more lively, while the most positive market seems to be the Middle East. In recent weeks scrap prices have dropped and iron ore prices are expected to decline in the fourth quarter. Saying that the market will acquire clearer shape as China returns from its holiday, Mr. Saadi noted that in the Middle East market billet prices have reached the levels of rebar prices and that this situation limits the operating rate of local producers. However, the outlook for the last quarter of this year remains positive Mr. Saadi said, as he summed up the sentiment of the committee.

Notes to Editors:

IREPAS is a global association of producers and exporters of long steel products. It was founded by CELSA and GERDAU 27 years ago to develop understanding between producers, traders and consumers around the world. Today, IREPAS unites producers, traders, consumers of steel and professionals from the shipping and finance industries.

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