IREPAS in Istanbul: All eyes on protectionist measures as IREPAS celebrates its 35th anniversary with record attendance

The 79th meeting of IREPAS (International Rebar Exporters and Producers Association) was held in Istanbul, Turkey on September 16-18, 2018. There were 139 producer representatives among the record 519 registered delegates from a total of 52 different countries. There were also 84 registrations representing 45 different raw material suppliers.

At the opening of the conference which celebrated the 35th year of this bi-annual meeting, Murat Cebecioglu, chairman of IREPAS, said that free and fair trade is one of the few unambiguously good principles and allows resources to flow to their point of best use, helping countries and companies to thrive and prosper.

Mr. Cebecioğlu emphasized that IREPAS has continuously been an advocate for free and fair trade, while admitting that these are unfortunately difficult times for world trade. The IREPAS chairman said that the unilateral US tariffs, which are unjustified and in contravention of World Trade Organisation rules and principles, are inspired by protectionism. The IREPAS chairman stated that there is a certain overcapacity problem in the industry, adding, however, that many countries faced with such tariffs are not the source of the problem but, on the contrary, are equally hurt by it. Mr Cebecioğlu went on to say that it is very difficult to negotiate when trade measures are used as a political weapon and to threaten other countries. The IREPAS chairman concluded by saying that, in spite of such drastic developments, business sentiment in the market is still positive, though with fluctuations in certain areas due to ongoing instability.

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 : Strong demand observed for scrap

Jens Björkman, chairman of the raw material suppliers committee, said that ferrous scrap prices have seen some volatility in the past months but generally the scrap market is building on a positive trend seen since 2016. He added that, with Chinese domestic steel consumption rising and better capacity utilization rates around the world, raw material suppliers have been enjoying stronger scrap demand. Regarding scrap destinations, the raw material suppliers committee chairman said that there has been growth seen in demand from Vietnam, Brazil, Mexico and Bangladesh.

According to Mr. Björkman, due to import tariffs in the US, scrap demand in the US domestic market has been stronger and, while scrap prices in the US dropped by $20/mt in September, they are likely to rebound in October. Regarding the import quotas in the EU, Björkman said that this has also resulted in improved demand in the domestic market. As a consequence, scrap supply has tightened slightly and volumes set aside for export have decreased. However, he stressed that uncertainty exists regarding the future of the trade measures in the EU as they have a February deadline.

Mr Björkman also commented that the inflation and the devaluation of the currency in Turkey, the epicenter of the scrap universe, slowed down Turkish domestic demand for steel products, though lately steel exports have kept production at elevated levels and Turkish demand for scrap has been maintained. He stated that the possibility of a slowing down in scrap demand in Turkey will potentially have a negative impact on scrap prices.

Traders at IREPAS: Trade measures and possibility of additional tariffs under the spotlight

Representing the IREPAS traders committee, F.D. Baysal said that the traders committee focused on trade measures, discussing whether any additional tariffs might come into effect which he finds unlikely. Regarding possible trade measures by Canada, Mr. Baysal said that Canada is rightfully protecting its industry from the diversion of trade which was originally targeting the US market. “I hope they will not go overboard and kill trade with other countries”, he added. The committee chairman underlined that in a protectionist environment “what is going to suffer is quality along with price”, saying that however, it will be difficult to maintain protectionist measures in the long run.

The committee chairman indicated that producers in the US are enjoying their best period, but not producers in other parts of the world. “In China, the economy and production is improving. Most of the production will eventually  turn into exports. He stated that he was very optimistic about the ability of China’s environmental policy to reduce production, adding though that he has learned that China will build 40 new electric arc furnaces, meaning that even less pollutant Chinese production capacity will increase.

Commenting on the graphite electrode situation, Baysal said that electrode prices are still high right now and that the traders committee does not expect any supply shortage. He added that the committee thinks iron ore prices will probably remain steady, while scrap prices will come under downward pressure due to the demand situation in Turkey and possibly Argentina.

Producers at IREPAS: The name of the game today is protectionism

Mr Murat Cebecioglu, chairman of IREPAS and also of the IREPAS producers committee, stated, “The name of the game today is protectionism. It has become a bargaining chip”. Mr Cebecioglu said that the 3 percent growth and the growing private construction in Spain along with similar situation in Portugal are good news for the long products producers. As the recovery is in progress for the Greek economy, there is positive trend in Bulgaria and good fundamentals are suppoorting the market in GCC, the sentiment in the market is positive he added. Mr Cebecioglu stressed that Turkish mills are flexible and will find new markets to replace the US, though he added that producers in general are concerned that there will be an even further surge in protectionist measures if countries do not come together to discuss the issue at the World Trade Organization (WTO) level.

Regarding the price increases and expectations of higher profits for steel producers in the US following the introduction of trade measures, Mr. Cebecioglu said that the US mills are effectively shaping US trade policy.

Commenting on the retroactive duties Canada imposed on Turkish rebar, the IREPAS chairman remarked that Canada has started three cases against Turkey within one year, adding that the producers committee does not know what to expect concerning Canada’s measures on steel imports in response to the US measures, but he believes this will become clearer within a couple of weeks.

Mr. Cebecioglu stated that the US has to continue importing rebar as its domestic capacity is not sufficient. As a result, a lot of countries are expected to increase their share in the US market, such as Portugal and Spain, and he added that even Bulgaria has started to export rebar to the US. Regarding Turkey, with the US market closed to Turkish imports, the IREPAS chairman said that Yemen has become the number one export market for Turkish long products, and he also underlined that Turkey has a very structured domestic rebar market and so the absence of the US as an export market will not have any downward effect on Turkey’s production. He also listed the Far Eastern and North African countries as target markets for Turkey.

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