Achieving healthy margins is key

Achieving healthy margins is key

The 67th meeting of IREPAS (International Rebar Exporters and Producers Association) was held in Munich between September 30th and October 2nd, 2012. There were 80 producer representatives from amongst the 276 registered delegates from 37 different countries.

Ioannis Meimaroglu, the chairman of the IREPAS Raw Material Suppliers Committee, said that steel mills have been trying to secure their orders before finalizing their raw material purchases due to instability and difficulties in the finished steel market, which means that they have been obliged to change their strategy from working on stock basis to working mainly on spot basis. He went on to state that this is affecting steel scrap suppliers very negatively since they cannot collect material on a continuous basis, as they do not know at what price level the material will be sold when their customers come to the market.

Mr.Meimaroglou added that this situation is also posing problems for steel producers, as they can never be sure of steel scrap availability at the requested prices on spot basis.

Underlining that scrap suppliers need time to collect scrap and cannot meet demand from steel mills at short notice, Mr.Meimaroglu said that scrap suppliers understand the concerns of the steel mills and the uncertainty in the steel markets, as steel export destinations become more limited and as Chinese steel exports target steel mills’ traditional customers.

He added; it is also very important for steel producers to help keep their raw material suppliers alive, as the latter are facing pressure from finished steel
markets and also price competition in their domestic markets, as well as fluctuations in currency exchange rates and export regulations.

Michael Setterdahl, the chairman of the IREPAS Traders’ Committee, listed the economical crisis and Chinese exports as major concerns in the market, stating that macro decisions made by some governments, especially China,  have recently been impacting the steel prices more than the producers’ own pricing policies. Mr.Setterdahl added that as long steel production is low globally except for China and Turkey , the outlook for prices of long products in 2013 is positive and recapped the discussions by saying “Everything depends on demand and supply, as always.”

Uğur Dalbeler, chairman of both IREPAS and the Billet Suppliers’ Committee, stated that the recent news on Chinese supply has put some pressure on steel billet prices in the international market. However, he went on to say that the view of the billet suppliers’ committee is that downward price movement may not be seen, as downward pressure on prices is expected to be softened by the oncoming winter season. The IREPAS chairman stressed that the real issue for the producers is to achieve healthy margins in business. The committee agreed there are shortages of scrap and that this is the main reason why billet prices have not decreased further. He characterized the general situation in the global billet markets as being in equilibrium. In conclusion, Dalbeler emphasized that, the
difficulties in scrap collection during winter months will provide support not only for scrap but also for billet prices.

Mohammed Al Saadi, the chairman of the IREPAS Rebar and Wire Rod Suppliers Committee, mentioned that the local Turkish market seems strong, with demand at good levels in the market. While the situation in Qatar and other Arab countries seems healthy with high production capacity utilization rates, demand in these countries is also good on the back of ongoing investments and projects. In the meantime, whereas political issues in Syria and Iran have been affecting the business in a negative way, everybody hopes the situation will be resolved in the short term, Mr. Al Saadi said.

Mr. Al Saadi explained that almost 65 percent of the production in Europe, especially Italy and Spain, is exported, adding that the US and Carribean markets seem stable, while global market conditions in general are likely to continue in their current state until next year. The committee considers the main market
concern to be Chinese supply, which also has a psychological impact on business.

Notes to Editors:

IREPAS is a global association of producers and exporters of long steel products. It was founded by CELSA and GERDAU 29 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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