IREPAS in Berlin: Specter of rising Chinese exports haunts the markets

The 71st meeting of IREPAS (International Rebar Exporters and Producers Association) was held in Berlin, Germany on September 28-30. There were 82 producer representatives among the 288 registered delegates from 40 different countries. There were 48 registrations representing 33 different raw material suppliers.

Raw material suppliers: Increasing Chinese exports will alter market balances

Ioannis Meimaroglou, chairman of the IREPAS raw material suppliers committee, stated that the increasing volume of exports from China due to the slowdown of Chinese domestic consumption is influencing the world market and will certainly change the existing steel trade balances. Mr. Meimaroglou said that the some members of the raw materials committee expressed the view that the threat of cheap Chinese steel exports is being used more as a pretext to exert downward pressure on raw material prices, while others stated that, if Chinese exports reach 100-120 million tons annually, the consequences will be serious, independently of whether these exports are directed to Turkey or to other countries.

Meimaroglou added that the increasing raw material demand in the market and particularly in the Arabian peninsula is creating a new situation in the region and can change the correlations on a more permanent and long-term basis. He went on to say that the considerable fall in iron ore prices has been increasing the pressure on scrap prices, adding that the strengthening of the US dollar is helping raw material suppliers for the time being, covering a part of the price fall.

Regarding scrap collection, Meimaroglu stated that the domestic markets in the US, Europe and Russia are very strong and healthy and so it is difficult to compete with them in order to collect material for export, leaving most scrap yards almost empty. He concluded by saying that the raw material market is likely to see further pressure on prices, drastically affecting suppliers’ quantities, while also adding that the direction of scrap flow may change in the future.

Traders see new possibilities for business with Iran, upbeat on Iraq and Ukraine

The traders committee chairman F.D. Baysal said that, despite the political instability in the Middle East, particularly in Iraq and Syria, shipments to Iraq are still continuing, though with some interruptions. He underlined that there are new possibilities for buying from and selling to Iran which is a new market to look forward to.

Regarding the tensions between Ukraine and Russia, Mr. Baysal stated that business is being carried on as usual, with minor interruptions which do not pose any major problems for traders. The trade flow in the region is observed to be continuing as before.

Commenting on different antidumping cases, Mr. Baysal remarked that, since Turkey is exempt from US rebar antidumping duties, rebar exports from Turkey to the US will continue, adding that the pricing may not change. He pointed out that, with China exiting the US market as a result of the wire rod antidumping duty investigation, there will be new countries entering the US market.

With regard to the increasing volumes of Chinese exports flooding the market, Baysal said that he has been always a supporter of free trade as long as it is also fair trade – speaking in response to market information that China is exporting to North Africa with 180-day credit terms, with insurance provided by a state-owned company.

Finally, commenting on raw material prices, the traders committee chairman said that iron ore prices have been declining and probably will decline further, forcing scrap prices to decline as well. Traders are looking forward to seeing lower prices, he affirmed.

Steel producers: Changing billet prices will lead to new market realities

The chairman of the steel producers committee, Kim Marti, who is also chairman of IREPAS, stated that Turkey is out of the billet market in addition to the interruptions to the business in Ukraine and that the market has been left to the Chinese mills. Mr. Marti added that the Chinese billet suppliers gaining ground in the region will put pressure on billet prices in the Mediterranean and Black Sea regions and also on scrap prices, since billets are used as a substitute for scrap. Mr. Marti, along with the other committee chairmen, agreed that certain measures should be imposed against Chinese exports.

Mr. Marti pointed out that the changing billet prices will take the industry to a new setup in the coming months, though also saying that the market adjusts quickly to new realities. Rebar demand will see a slight increase compared to 2013, Mr. Marti said, adding that the Turkish mills are happy with their domestic market and are looking forward to new trade routes opening up again to Iraq.

The producers committee chairman also said that, while the northern EU countries are performing well, the situation is less bright for southern EU countries. Italian, Spanish and Greek mills are still facing significant overcapacity under very slow market circumstances, finding the balance with exports to North Africa and production cuts. Mr.Marti added that they are starting to see signs of revival in consumption in Greece and Spain.

Commenting on the EU mills’ investments in environmental protection, Mr. Marti said that it is not something that the mills should abandon, while other committee chairmen agreed that environmental protection constitutes a social responsibility aspect of businesses and should be continued.

One Response to “IREPAS in Berlin: Specter of rising Chinese exports haunts the markets”
  1. In general agree on the mentioned above, but I don’t think Chinese export will reach 100 – 120 million tones.
    Alternatively Ukraine is coming back soon and this will be a good alternative source of Billets, Pig Iron for Turkey & middle east.

    Even the last 30 % price dropping, still The price of all items in Steel production cycle are matching EXCEPT Scrap prices which will be forced to decline as well.

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