Short Range Outlook : April 2024

Global longs market under pressure from weak demand and China’s aggressive exports

Demand in the global long steel products market continues to lag behind supply and the situation is getting worse because of China’s aggressive export policy. At the beginning of 2024, China accelerated its exports. Based on the data for the first two months of 2024, they are poised to exceed their record exports seen in 2015. Chinese steel producers seem to be making profits in each sale, with the lower iron ore and coke prices and lower energy costs in China. However, their long product exports are still far behind their  flat rolled exports.

Demand very quiet in Europe, may not improve until second half

The European market is still very quiet and Germany especially is one of the cheapest places on earth for reinforcing bars and wire rods. Demand in Europe has disappeared again after a slight improvement at the end of 2023 and it seems it will not get better before the second half. Cut and bend prices are at levels which do not even match replacement costs. It will probably take months before spreads return to normal.

Price fluctuations in the US, less liquid steel being produced

The US market is wobbling. Some prices are up, some are down. The US produced 600,000 net tons less liquid steel in the January 1-March 23 period this year, compared to the same period of 2023. Customers in the US, the EU and Canada are waiting for interest rates to ease and are delaying projects in the meantime.

Weak lira to continue to impact Turkish mills’ competitiveness

Turkey held its local elections at the end of March, with the economy set to slow down afterwards. The Turkish government is seeking to keep the current value of the Turkish lira and that will maintain the disadvantage for Turkish steel mills in terms of their competitiveness. However, Turkey may be helped in this regard by the political turmoil in the Middle East. (update on April 9th: How ever Turkey’s Ministry of Commerce has announced that it has restricted the exports of 54 product groups to Israel including  reinforcing bars and wire rods. Israel is among the largest markets for Turkish exports of these products)

Profit margins vary greatly, decisions on monetary policies awaited

Profits are being eked out here and there and in some places extraordinary profits can be noted. The market is waiting for positive signals from financial authorities in general.

Red Sea crisis reduces some competition

It is difficult to judge competition. Business is more regionalized and local competition exists. Some competition is absent due to the crisis in the Red Sea.

Market conditions unstable and difficult, huge uncertainty ahead from July on

Under these circumstances, the market conditions can be described as fluctuating unstably and difficult. The outlook for the market for the next quarter is complicated and challenging with huge uncertainty for July, August and September.




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