The global long steel market is yet to reach bottom, with supply still outpacing demand. The market is waiting for action from Chinese authorities to stem exports, as iron ore prices drop below $110/tonne, but nothing has materialised so far, says the International Rebar Exporters and Producers Association (Irepas).
Turkish mills are waiting for EU demand to improve. Otherwise, along with continuing Chinese exports, Turkish mills will be forced to reduce production further.
“Business in the EU … is in total stagnation,” the association says in its June short-range outlook seen by Kallanish. “This situation has been continuing in the EU for about a year now and there are no signs of improvement in sight. Investments are still low despite the interest rate decrease and most of the cut and bend shops have free capacities such as they have never had for ages.”
The EU’s safeguard extension “will keep imports away from Europe despite the need to meet the CO2 emission agenda and the lack of adequate qualities for some products. It looks like Europe is supporting old industry instead of investing in new industry and technology,” it adds.
In the US, domestic mills have built enough new capacity to meet all demand, with prices equal to or better than import prices, making imports unattractive.
Scrap prices in the international market are still holding, which is eating the margins of steel producers down towards zero. North American scrap has been down every month this year; however, flows have kept on coming.
Market regionalisation continues to gain ground, and those markets with overcapacities will suffer. “At the same time, downstream industry will suffer everywhere where no competitive feedstock products are available. Consequently, the EU will be bombarded with ready finished products from the same sources which previously provided only the feedstock products,” Irepas notes.
Market players are mostly in wait-and-see mode, with the outlook unsatisfactory and in line with the international political outlook, it concludes.
Adam Smith Poland
