IREPAS in Vienna: Global longs market focuses on challenges amid signs of stabilization

The 75th meeting of IREPAS (International Rebar Exporters and Producers Association) was held in Vienna, Austria on September 25-27, 2016. There were 94 producer representatives among the 285 registered delegates from 33 different countries. There were also 44 registrations representing 30 different raw material suppliers.

On the last day of the conference, producers of long steel products and steel billets, 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: Scrap demand will return within a few months

Jens Björkman, the chairman of the IREPAS Raw Material Suppliers Committee, said that iron ore pricing has been more stable lately. He added that the slowing growth in China is increasing pressure on capacity utilization and is also weighing on steel prices. Having that said, the raw material suppliers believe that the market is in a better position in terms of exports from China.

Regarding the scrap market, the raw material suppliers committee’s findings indicate a relatively stable market and the committee expects demand to return within a few months. Mr. Björkman said that scrap inflow in the Western world, namely, in the EU and the US, is down by around 20 percent this year compared to 2015, thereby affecting the profitability of recyclers. He also stated that the high value of the US dollar is putting pressure on dollar-based scrap pricing, while US domestic demand has dropped and this is the main factor causing the decline in scrap prices.

Commenting on the international trade, the IREPAS Raw Material Suppliers Committee chairman said that Brexit resulted in the weakening of the pound, which opened the way for more exports coming from the UK. On the other hand, Turkish scrap trade has lately become more based on prompt shipments, while Russian scrap exports have declined sharply since domestic demand in Russia has improved. He also stated that the financing of the scrap trade is better in Russia, while, in the case of Turkey, banks were hesitant in the immediate aftermath of the coup attempt in July this year. He also commented that the recent rating downgrades for Turkey might impact financing as well. Mr. Björkman stressed that, with the last quarter of the year just around the corner, many suppliers are not interested in holding stocks.

In answer to a question on Ukraine’s scrap export tax,  Mr. Björkman said that exports from the country have diminished and the supply from the Baltic region has compensated for the loss of supply in some regions, adding that Turkey might need to book larger deep sea cargoes and this would mean a riskier operation for the Turkish steel industry.

Traders at IREPAS: Possible antidumping duty on Turkish rebar imports into the US is likely to increase pressure on prices

Representing the IREPAS Traders Committee, Wilhelm Alff from Duferco affirmed that traders are also concerned by the recent antidumping filing by the US-based rebar producers, pointing out that the quantities of imports are much higher compared to the previous filings. The traders committee expressed the view that Turkey has to find an arrangement with the US administration to continue rebar exports, otherwise “they need to find a new home which will increase pressure on market pricing”, said Mr. Alff. He also stated that the reason the US rebar importers choose Turkey as a supply source is not only price; he said that, besides being competitive in pricing, Turkey is also capable of meeting every specific type of requirement the US reinforcing bar market needs, which most other suppliers are not able to do.

Commenting on China, the IREPAS Traders Committee chairman said that capacity reduction is not everything; the bigger problem is the excess production which is creating a huge disturbance in the market. He stated that closing the mills is a very political issue; the potential loss of employment as a result of the closures will create a headache for the administration. The committee chairman also indicated that, even if China is granted market economy status, it will not change a lot for the industry except for trade cases which becomes more difficult for applicants.

Answering a question on whether the failed coup attempt in Turkey has had any effect on business, Mr. Alff said that he has not experienced any doubts on the customers’ side regarding Turkish supply, other than concerns about deliveries within a few days of the coup attempt; otherwise, it has been business as usual.

Steel Producers at IREPAS: Market conditions are more stable

Murat Cebecioglu, the chairman of IREPAS and also of the IREPAS Producers Committee, commented that in general the market conditions are more stable compared to previous years, while market players from the GCC countries are a little bit more optimistic than their EU counterparts. “Things are improving slowly but surely,” he added.

Mr. Cebecioglu said that trade protectionism is a significant issue for export-dependent countries, since competition is getting tougher and the pressure on exporters is increasing. He expressed the belief that export destinations will become limited and producers will have to find new places to sell their products. He also commented on the US antidumping filing on rebar imports, recalling that three years ago the same trade case resulted in zero margins. He went on to say that this time it is political, adding that the petitioners always change the method by which they calculate margins; however, he still expects the US producers’ coalition to come up empty-handed. He said he is confident that his company does not sell dumped goods to the US, while also stressing that the Turkish industry is certainly not subsidized.

In answer to a question regarding the granting of market economy status to China, the IREPAS Producers Committee chairman said that the decision makers have to think twice, adding that, if China is granted market economy status, trade measures will become more difficult. Mr. Cebecioglu stated that he considers it is too early to talk about the effects of Brexit in terms of international trade, but he hinted that Turkish mills might benefit from it.

Leave A Comment