Long products demand has improved, following the winter holiday season, everywhere but in Europe, says the International Rebar Exporters and Producers Association (Irepas).
In the EU, mills are running at low capacity and prices are lower than in many other markets. Despite the good weather in February, inquiries from construction sites were much lower than expected. Most cut and benders had their yards fairly well stocked and so had no need to replenish. Raw material prices have meanwhile strengthened considerably despite very low demand for finished products, and mills’ margins were squeezed into the red, Irepas says in its latest note seen by Kallanish.
Mills had to increase prices in recent weeks or start shutting down their EAFs. It remains to be seen however whether the price hikes are accepted. “Lower energy prices help little because electricity prices in the region remain unpredictable,” Irepas observes.
Turkish rebar mills remain largely uncompetitive. They can only ship west in the search for a positive margin. Lower energy prices are helping to reduce inflation and the cost of manufacturing, which creates a positive mood. However, there is still a big gap with offers coming from North Africa, the Gulf Cooperation Council and Southeast Asia.
Post-earthquake reconstruction is not expected to change the volume of Turkish market demand, but rather the focus of demand. “The government will be focusing all their efforts on reconstructing new housing for those who need shelter and so all other works will be on hold for a while,” Irepas observes.
Scrap demand outpaced supply in February as inventories needed to be restocked quickly, with energy prices easing and production levels normalising. The implementation of Turkish flat product import duties to stimulate local production and therefore scrap demand has nevertheless been postponed following the earthquake.
US mills have pricing power and very healthy profit margins. General demand in the US is flat, though a slowdown in construction is expected in the coming months for both residential and commercial construction, amid high interest rates, Irepas says.
“China still constitutes a big hope to start the wheel running even though it has started much slower than expected after the Chinese New Year holidays, despite the previous forecasts for a rapid rebound,” the association concludes.
Adam Smith Poland