IREPAS in Belgrade: Longs market outlook unclear amid coronavirus threat

The 82nd meeting of IREPAS (the International Rebar Exporters and Producers Association) was held in Belgrade, Serbia on March 1-3, 2020 in conjunction with the SteelOrbis Spring ’20 Conference.

Unfortunately, the coronavirus outbreak had a negative impact on our 82nd meeting in Belgrade. After the news about the coronavirus cases observed in Italy by late February, many participants due to attend the 82nd IREPAS meeting decided not to travel to Belgrade due to concerns about the developing situation. However, since the circumstances in Belgrade and Serbia did not require or allow any change or alteration of the originally planned event, it was decided that the conference would be held and go ahead as scheduled.

Obviously the major topic of discussions during the meeting was the coronavirus outbreak. The potential impact of the coronavirus on the markets was summarized as follows.

  1. Demand in the global iron ore market will return after the initial dramatic slowdown.
  2. It was heard that Chinese steel mills have huge unshipped stocks of steel following the outbreak and that Chinese exporters are expecting prices to fall.
  3. The first offers of Chinese origin billets to the Mediterranean region have also been heard. Consequently, it is expected that China will return to the export markets.
  4. The best-case scenario regarding the impact of the coronavirus is that the world loses business for two months, that the world loses confidence in itself, and most likely China will take a confidence hit of large proportions, while the worst scenario is that the steel industry will be hit like in 2009, as has the stock market just this past week.

On the other hand, the producers at the conference emphasized that currently there is almost zero margin between scrap and rebar and that demand is being affected by both political and economic circumstances and by the virus outbreak. Since margins are where they are, it would seem the market is at an equilibrium near the bottom, unless scrap and iron ore prices fall.

The raw material suppliers pointed out that, while manufacturing seems to be picking up in the western world, short-term pricing trends are pointing in a negative direction due to the current circumstances.

The scrap market is expected to continue to see a volatile period, the raw material suppliers noted. They added that uncertainties and protectionist measures have had impacts and will continue to play a role in pricing going forward.

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