IREPAS in Barcelona : Protectionism, raw materials and Turkey top the agenda

The 80th meeting of IREPAS (International Rebar Exporters and Producers Association) was held in Barcelona, Spain on April 7-9, 2019. There were 132 producer representatives among the 416 registered delegates from a total of 48 different countries. There were also 70 registrations representing 40 different raw material suppliers.

At the opening of the conference Murat Cebecioglu, chairman of IREPAS, said that IREPAS firmly believes in, has supported and will always continue to support free and fair trade in steel but is very concerned by the recent developments triggered by the unilateral US tariffs, which are unjustified and against the World Trade Organisation rules and principles.

The IREPAS chairman stated that, in spite of all such protectionist measures, the global long steel products market is currently in a positive mood amid good demand worldwide. He added that, had there not been protectionist actions like the additional tariffs, quotas or safeguard measures, the global business scenario would certainly be much better. Mr.Cebecioglu said that protectionism is like a virus, expanding and hurting the international trade environment.

On the last day of the conference, producers of long steel products, 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 : Two major events have impacted the market

Jens Björkman, chairman of the raw material suppliers committee, said that, since the previous IREPAS meeting held in September 2018 in Istanbul, two major events have impacted the raw materials market. The first of these events was the significant reduction in production by Turkish steel producers – the leading buyers of scrap in the world – and the corresponding reduction in their demand for scrap. Turkish mills’ scrap demand has stabilized somewhat since then but it still remains at low levels, a fact which scrap suppliers will have to get used to. Mr. Björkman said that most of the raw materials committee members believe that they will continue to see reductions in Turkish demand for scrap due to poor domestic market conditions in Turkey.

According to the committee chairman, the second major event that influenced the raw materials market was the iron ore waste dam collapse in Brazil, which has had a strong influence on iron ore prices. He added that iron ore prices increased by 20 percent within a short time and that prices have continued to move upwards. Mr. Björkman also touched upon some other factors affecting the raw materials market, namely, the low water levels on the Rhine which had made logistics extremely difficult and costly, leading to a slowdown in the accumulation of scrap at ports for export. He stated that the slowing down of the EU automotive sector in the last six months led to the lower availability of prime scrap for export.

The committee chairman said that there has been some buildup of scrap demand in areas such as Southeast Asia, South America and North Africa, which is balancing the reduced demand from Turkey though not entirely. Answering a question about the influence of the Section 232 tariffs on US scrap exports, Mr. Björkman said that in the past few months there have been some reductions in US scrap exports, partly because of lower import needs from Turkey and partly due to stronger demand in the US domestic market, adding that US domestic scrap demand is driving down the availability of scrap for exports.

Regarding steel production in the EU, he pointed out that it has declined somewhat in the first few months of the current year, while both demand for scrap in the EU and intra-EU trade have been active and strong.

Commenting on the financing of the scrap trade, Mr. Björkman said that, right after the currency crisis in Turkey, availability of letters of credit was tight in the country and financing costs for Turkish mills increased substantially, with the currency fluctuations making these issues much more challenging.

Traders at IREPAS: Safeguard measures have a major impact on trade

Representing the IREPAS traders committee, F.D. Baysal said that safeguard measures are having a major impact on steel trade. Referring to a question by his fellow traders, Mr Baysal commented on Turkey’s alternative markets and said that Africa will by no means replace the US and the EU as a destination for Turkish exports. Mr. Baysal said there are not a lot of places the extra supply in Turkey could go to and the only solution is reducing capacity utilization.

Answering a question regarding the potential for Iran’s billet exports, Mr. Baysal said that Iran is not likely to produce steel any cheaper than Turkey, Saudi Arabia or Algeria, while sanctions make it almost impossible to buy Iranian steel.

Mr. Baysal also stated that, while the Chinese government is taking serious measures and reducing production, Chinese suppliers will definitely not be absent from the global market but, as they are more contented in their domestic market, they will be less destructive in terms of pricing in the export markets. He added that the cut in VAT in China will help stimulate the economy.

Producers at IREPAS:  Importers have become exporters and vice versa

Mr Murat Cebecioglu, chairman of IREPAS and also of the IREPAS producers committee, said that GDP is growing in most countries worldwide although growth is slower than expected in some markets. Nevertheless, he added that things are getting better, which signals good demand. The IREPAS chairman said that protectionist measures are spreading like a virus throughout the world, changing trade flows.

He pointed out that importers have become exporters and vice versa. Mr. Cebecioglu stated that US President Trump totally destroyed the markets with tariffs and that others are following suit, starting a chain effect, increasing customers’ costs and ultimately causing economies to slow down.

Answering a question about the troubled Turkish exports, Mr. Cebecioglu said that the main export markets for Turkey have become Yemen and Israel, with the US and Canada being out of reach. However, the committee chairman reiterated that the Turkish steel industry has gone through difficult times before and will get through this one as well.

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