Global markets face economic strains, inflationary pressures, trade measures: Irepas
The global economy faces significant challenges amid uncertainties over US trade policy before the Trump administration takes office Jan. 20, the International Rebar Producers & Exporters Association, or Irepas, said in its latest short-term outlook released Jan. 17.
The proposed tariffs, including a 25% duty on imports from Canada and Mexico, could disrupt supply chains, raise costs and increase global economic strains, Irepas said, adding that rising borrowing costs could further burden industries like construction, which were already struggling with low demand and inflationary pressures.
While some importing countries already subject to Section 232 tariffs, like Turkey, may benefit from a more level playing field in the US, the proposed tariffs may also increase costs for domestic construction, it said.
“These costs impact businesses, especially in capital-intensive industries like construction and could slow economic growth further, thus adversely affecting steel demand in general,” it said.
The pressure on the global long steel products market had been increasing as there was no positive news from China yet, while there was weak demand, market protection and excess capacity, Irepas said.
The EU was expected to announce a revision of its protective measures on April 1, while Turkey and India have already announced market protection measures, it noted.
India launched a safeguard investigation on imports of non-alloy and alloy steel flat products on Dec. 19, while Turkey started an antidumping investigation on cold-rolled, galvanized and pre-painted steel coil imports from China and South Korea in December after imposing antidumping duties on HRC imports from China, India, Japan and Russia in October.
“Competition in the market is very strong, while the market can be described as very poor and unstable, with a very unsatisfactory outlook,” Irepas said.
Platts, part of S&P Global Commodity Insights, assessed Turkish HRC at $550/mt ex-works on Jan. 10, down 22.5% since the start of 2024.
Emission regulations, trade tensions challenge automotive sector
Emission regulations and growing trade tensions between China and the West, particularly in the electric vehicle (EV) market, will be major challenges for carmakers in 2025, says consultancy Gartner, Inc.
Software and electrification will remain the two main drivers of the automotive sector’s transformation, notes Gartner analyst Pedro Pacheco.
“For years, production overcapacity has been a challenge for several European and North American car factories, but the recent increase in import tariffs on Chinese EVs imposed by the US and the EU is likely to exacerbate this issue,” Gartner observes. “In response, Chinese automakers may set up factories in Europe and the US or in free-trade partners like Morocco or Turkey to maintain competitive pricing.”
According to Gartner, this situation will likely force several automotive factories with low utilisation to close or be sold to other automakers. “This will also create a domino effect, leading to the closure of supplier factories. This will redefine the car manufacturing map of the US and Europe, making low-cost countries the major hubs in the automotive production capacity and supply chain.”
The evolving political landscape in the US and EU is reopening the discussion on vehicle emission regulations, creating uncertainty for the automotive industry. As a result, some original equipment manufacturers (OEMs) may be reluctant to put EVs at the centre of their strategy, Kallanish notes.
Gartner estimates global EV (bus, car, van and heavy trucks) shipments will grow 17% in 2025. By 2030, it predicts that more than 50% of all vehicle models marketed by automakers will be EVs.
“Legacy OEMs have struggled to advance their in-house software capabilities,” the group observes. “As a result, many have made agreements with Chinese OEMs to acquire their vehicle electrical/electronic (E/E) architecture, thereby increasing their reliance on the software and hardware capabilities of Chinese EV makers.”
Final long-term EU coil contracts eye settlement
The negotiations for annual supply relationships between European coil mills and large consumers, mostly in the automotive sector, have now largely been settled, with few still outstanding.
Most agreements were struck shortly after the winter break. By mid-December, one mill source said that agreements would not be completed before January, at least not with the big consumers. Smaller customers, such as service centres, had already spoken of finalised deals in early December.
Meanwhile, the mill source informs Kallanish that some annual and half-year agreements have been settled. “For the remaining contracts, the negotiations are in the final stage where the window between customers’ and mills’ expectations has narrowed down to around €10-20/t [$11-22],” he notes.
This is a noteworthy approximation, given that customers had initially asked mills to reduce their prices by over €100/t in comparison to the prices secured one year earlier.
Amid an already pitiful spot price environment, with sales volumes significantly restricted for several months now, big year-on-year annual contract price declines would have meant another blow to the profitability of mills. In December, many sources already reported increasing willingness by customers to make do with more modest reductions, as it would make little sense to starve their established suppliers.
According to the mill source, deals were now struck at a y-o-y reduction of €60-70/t, a figure confirmed from the side of automotive suppliers. One buyer tells of a reduction range struck with tier suppliers as well as with OEMs of €50-70, “with slightly more [deals] towards the higher end.”
He notes that deals with most mills have been completed, except for one group, “which is still playing hard-to-get, but they will be inclined to go in that direction, too”.
IREPAS Short Range Outlook: January 2025
Pressure still rising in global longs market, some answers expected after January 20
The pressure in the global long steel products market is increasing as there is no positive news from China yet, while everywhere there is weak demand, market protection and excess capacity. Some questions about the future are expected to receive answers after Trump’s inauguration on January 20
Still no positive news heard from China
Chinese export data for November 2024 showed that China was on its way to a record year in steel exports. The economic news coming from China is less than encouraging and there is no anticipation of any resurgence in its domestic demand for long steel products in 2025. In fact, it is puzzling how Chinese steel users still manage to consume 900 million mt of steel annually.
Global markets face economic strains, inflationary pressures and trade measures
The global economy faces significant challenges amid uncertainties over US trade policy before the new administration takes office. The proposed tariffs, including a 25 percent duty on imports from Canada and Mexico, could disrupt supply chains, raise costs and increase global economic strains. Rising borrowing costs could further burden industries like construction, which are already struggling with low demand and inflationary pressures. While some importing countries who are already subject to Section 232 tariffs may benefit from a more level playing field in the US, the proposed tariffs may also increase costs for domestic construction. These costs impact businesses, especially in capital-intensive industries like construction and could slow economic growth further, thus adversely affecting steel demand in general.
Could actions by Trump prove to be counter-productive?
In the US, after Trump becomes president again, mass deportations of undocumented workers could create labour shortages, particularly in construction, driving up costs and slowing growth. Domestic mills, like Commercial Metals, report losses due to domestic competition with high production capacities recently added by all domestic mills and with more capacity increases expected. While rebuilding after the Los Angeles fires may eventually boost activity, this may still be years away.
Europe still experiencing negative growth, to issue new protective measures
Europe is still experiencing negative growth. The European Union is anticipated to announce a revision of its protective measures on April 1. Turkey and India have also announced market protection measures.
Unpredictable period with low visibility ahead: what will China do?
Although market observers are expecting some answers to their questions to be made clear after January 20, the fact is that we are probably entering a very unpredictable period with low visibility. That said, there is still hope that after its New Year holiday China may repeat what it did back in 2016, but we need to wait for another month to find out.
Very strong competition in very poor market, with quite unsatisfactory outlook
Competition in the market is very strong, while the market can be described as very poor and unstable, with a very unsatisfactory outlook.
Polish domestic rebar, wire rod prices increase on higher offers
Mills in Poland have been attempting to raise prices for long steel products since the beginning of December in an effort offset high production costs, especially high energy prices, but sluggish demand has hindered a more significant price rebound, Fastmarkets understands.
ArcelorMittal, which is among the key suppliers of long steel products in Poland, recently announced a €25 ($26) per tonne increase for all long-steel products across Europe.
Rebar
Polish mills were heard offering rebar at 2,600-2,650 zloty ($628-640) per tonne during the assessment week.
Considering ArcelorMittal’s latest price increase, offers for February production rebar were expected to increase by 100 zloty per tonne, sources said, but it remains to be seen if such levels would be sealed in deals.
Offers at 2,600-2,650 zloty per tonne CPT have been largely available in the Polish market since the beginning of December, with local mills trying to overcome the low levels from October and November deals.
Fastmarkets’ assessment for steel reinforcing bar (rebar), domestic, cpt Poland averaged 2,525 zloty per tonne in October and 2,516.25 zloty per tonne in November — 2024’s lowest levels.
The assessment stood at 2,600-2,650 zloty per tonne on Friday, widening upward by 40 zloty per tonne from 2,600-2,610 zloty per tonne a week earlier.
Although buyers were reluctant to accept the higher offers in December, producers appear to have been successful in pushing their targeted price level in January.
A producer source told Fastmarkets that they were completely booked for January, with tradeable levels reported at 2,600-2,650 zloty per tonne CPT.
Buyers’ estimations for the workable market level were slightly lower, at 2,600-2,610 zloty per tonne CPT.
But demand for rebar in Poland remained weak and no significant price rebound could be expected, sources said.
Rebar was heard traded at 2,650-2,700 zloty per tonne CPT in the secondary market.
Offers for Germany-origin rebar dame in at €620 per tonne delivered.
Ukraine was heard offering March-delivery material to Poland at €550-560 per tonne delivered in the border.
Wire rod
Polish mills have also been trying to increase offers for low-carbon drawing quality wire rod, Fastmarkets heard.
Local producers were offering the material at 2,700 zloty per tonne CPT. The offer prices were expected to reach 2,800 zloty per tonne CPT after the latest price increase, although it was still unclear if such a level would be accepted by customers.
Demand, however, remained low during the assessment week, with no signs of restocking.
Fastmarkets sources estimated the workable market level at 2,640-2,730 zloty per tonne CPT.
Fastmarkets’ price assessment for steel wire rod (drawing quality), domestic, delivered Poland was 2,640-2,700 zloty per tonne on Friday, narrowing upward by 40 zloty per tonne from 2,600-2,700 zloty per tonne a week earlier.
Italy was heard offering low-carbon drawing quality wire rod to Poland at €630-660 per tonne delivered, which is €10 per tonne higher compared to similar import offers from the beginning of December.
EU sees more steel HRC imports from Turkey, Ukraine in 2024 as Asian suppliers lose positions
Some suppliers, however, such as Turkey and Ukraine, managed to benefit from the situation by being the safest choices for HRC imports into the EU, while some Asian suppliers appeared to lose their positions in the European market, according to data from the Global Trade Tracker (GTT).
Hot-rolled coil is used mainly in the automotive industry and the construction sector. Total imports into the EU came to 8.43 million tonnes for the period January-November 2024, GTT data showed, with the statistics for the full year not yet complete.
Compared with the corresponding period of 2023, this represents a decrease of 6.77% from 9.04 million tonnes.
Imported volumes of HRC were 9.24 million tonnes for the full year of 2023, with the peak for the five years 2020-24 seen in 2021, when imports totaled 10.28 million tonnes.
Before the Russian invasion of Ukraine in February 2022, Russia was among the main suppliers of HRC to the EU, exporting 1.71 million tonnes of HRC in 2020 and 2.24 million tonnes in 2021. These volumes started to decrease after the invasion and were stopped completely after the EU imposed trading sanctions against Russia.
Consequently, Russia’s share of HRC imports into the EU was gradually taken up by other supplier sources, such as India, Taiwan, Japan, Vietnam, Egypt, South Korea and Indonesia, which have been offering competitive prices to the European market.
In 2022, some suppliers managed gradually to increase their deliveries to the bloc, with the difference between domestic HRC prices and imported prices having reached almost €100 ($103) per tonne.
For example, Fastmarkets daily steel HRC index, domestic, exw Northern Europe, averaged €907.20 ($933.66) per tonne in June 2022, while the corresponding assessment for steel hot-rolled coil, import, cfr main port Northern Europe, averaged €816.00 ($893.80) per tonne in the same month. The difference was €91.20 ($93.86) per tonne.
This trend continued in 2023, allowing some overseas suppliers to secure a bigger market share. For example, in 2023, HRC deliveries from Vietnam totaled 1.15 million tonnes, almost a threefold increase from 406,045 tonnes in 2022.
This tendency, however, has triggered a series of protectionist measures by the EU to safeguard its domestic steel sector. The European Commission started to impose tougher safeguard measures, launched an anti-dumping investigation into several HRC origins, and announced a new review of safeguards.
Stringent protectionist measures were also sought by the European steel industry.
As a result, in August 2024, the European Commission announced an anti-dumping investigation into HRC originating in Egypt, India, Japan and Vietnam.
Further, the Commission announced a new steel safeguard review in December 2024.
The latest review of the safeguard measures only came into force on July 1, 2024, with the introduced 15% cap per country over the tariff rate quota (TRQ) volume initially available in each quarter, for HRC and steel wire rod in particular.
With the implementation of the 15% cap per country over the TRQ, each nation under the category “other countries” is supposed to supply no more than 555,555 tonnes per year of HRC to the EU. This resulted in rapid exhaustion of some countries’ quotas in 2024, with the same trend now being seen in the first quarter of 2025.
If the total awaiting allocation (see table below) exceeds or even approaches the amount available for use under the TRQ, this should be taken as an indication that the quota will soon be exhausted, according to the European Commission.
Protectionist measures intended to support domestic prices
The year 2024 turned out to be a challenging period for the European steel industry, with low demand from the main steel-consuming sectors inhibiting the market.
In addition, some leading automotive companies in the region admitted that they were planning significant output cuts, which would inevitably affect the HRC market, Fastmarkets understands.
As a result, HRC prices in Europe have dropped to their lowest since 2020. Fastmarkets’ daily steel hot-rolled coil index domestic, exw Northern Europe, averaged €549.25 per tonne in October 2024.
During the period 2020-24, lower prices were seen only in 2020, when the Covid-19 crisis brought significant uncertainty to the market.
Despite the slight price improvement in the final two months of 2024, sluggish demand would probably hinder a more significant price rebound in the first months of this year, industry sources told Fastmarkets.
But all protectionist measures were expected to put a further limit on the availability of imported HRC in the EU this year, and in this way support the domestic prices.
Turkey, Ukraine still among safest options
With the EU safeguard measures suppressing the incentives to buy overseas-origin coil, Turkey and Ukraine turned out to be among the safest trading partners from which to buy HRC.
According to GTT, the HRC volumes imported from Turkey into the EU reached 1.21 million tonnes in 2024, a huge increase of 85.40% compared with 2023, when imports from Turkey came to 653,311 tonnes.
But 2023 could not be considered representative for Turkish HRC supplies to the EU, due to the two massive earthquakes in the Middle Eastern country in February of that year, which affected the south of the country. Some of Turkey’s leading flat steel manufacturers are located in this region and they were forced to stop production at the time.
Besides, the region affected by the earthquakes needed reconstruction and, after the Turkish mills resumed operations, they were less focused on exporting to the EU, and more on covering the domestic demand. Turkey even postponed some protectionist measures to facilitate the imports of flat steel products.
The disruption to steel supplies from Turkey as a result of the earthquakes led to more HRC supplies coming into the EU from Asian partners.
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GTT data also showed that, in 2022, exports of Turkey-origin coil to the EU reached 1.20 million tonnes, a volume close to that of 2024. But despite the fluctuations, Turkey has been gradually increasing its HRC supplies to the EU.
Ukraine also increased its exports of HRC to the EU last year, with the total volume reaching 997,985 tonnes. Compared with 722,653 tonnes in 2023, this was an increase by 38.10%.
In 2022, when Russia invaded Ukraine, the nation’s HRC exports to the EU amounted to 509.934 tonnes.
India stable, but other Asian partners lose positions
Despite the trade risks and safeguard measures, India remains Asia’s main importer of HRC into the EU, GTT data shows. From January to November 2024, the volumes imported from the nation reached 1.37 million tonnes, up by 16.96% year on year.
Other Asian trading partner nations, however, did not report such results. For example, the amount of HRC imported from Taiwan was 897,031 tonnes for the first 11 months of last year, down by 27.77% compared with the same months of 2023.
A similar trend could be observed for HRC imported from Japan, which totaled 837,169 tonnes for the period from January to December last year, a decline by 23.17% year on year.
The total volume of Vietnamese HRC imported in January-November 2024 was 701,461 tonnes, down by 39.09% compared with the previous year.
Imports of HRC from South Korea to the EU were also down over January to December last year, reaching 575,386 tonnes, a decline by 38.81% compared with 2023.
Russia struggles to find export destinations
With the implementation of the European sanctions against Russia, exporting HRC to Europe became impossible.
In addition to countries and companies rejecting Russian steel exports, the prices achievable in the few countries that were still willing to do business with Russia have continued to fall, industry sources told Fastmarkets.
Russia was also struggling with weak domestic consumption, they added, which put additional pressure on its steel sector.