Boom continues in global longs market, Q4 correction possible: Irepas

Although the boom has been continuing in the global long steel market amid an ongoing steel shortage, some price corrections could be possible in the last quarter of the year in line with the rise in global steel production, International Rebar Producers & Exporters Association (Irepas) said in its latest short-range outlook published June 7.

“There is still a shortage of steel everywhere in the global long steel products market and demand remains high in the sheltered markets. On the other hand, there is pressure from the Chinese government to reduce steel prices. It is hard to imagine that this will lead to anything but more supply shortages,” the association observed.

Noting that circumstances were different in previous global price booms, Irepas said: “While obviously we are in new territory, it may be noted that the 2008 boom ended with strongly falling prices. Last month, steel production was up by 23%. This trend will continue and, as a result, there may be some price correction in the last quarter of the current year.”

Highlighting that buyers in the EU have their hands tied and have no option but to accept new higher prices, Irepas said strong demand and scarce supply still prevailed in the US market.

“The world market will be in better equilibrium as China is almost completely out of the export market,” Irepas noted, adding that any downward trend – such as expected by some for Q4 – will certainly be much softer in this situation.

Noting that demand for ferrous scrap continued to increase as steel production globally strengthened, Irepas said well-booked steel mills at high prices will mean strong demand for raw materials through the next quarter.

“Another major positive for the market is that global raw material prices have seemed to be levelling off at the recent high prices, which brings some stability for future sales. The attempt by China to push raw material prices down has not succeeded,” Irepas noted.

Noting that overall demand is strong due to public spending, Irepas said the current status of the market can be described as generally stable with some short-term fluctuations possible.

“The outlook is certainly satisfactory if it cannot be described as outstanding. Going forward, competition will probably only be seen in Asia with some see-saw fluctuations, but it seems the overall market will remain ‘perfect to proceed,'” Irepas concluded.

— Cenk Can