Low global long steel demand is not expected to improve in the coming months, making operating under current conditions unsustainable, with more steel mill closures possible, the International Rebar Producers & Exporters Association said in its latest short-term outlook released Nov. 7.
Energy cost uncertainty and demand destruction had led to order cancellations, Irepas said, adding that demand for ferrous materials had slowed down considerably as industrial outlooks lost visibility.
“Customers are delaying purchase decisions while Chinese traders are shorting the market,” Irepas said, adding that mills were in trouble and even those in Asia were “entering the red zone.”
Prices were under pressure from aggressive Far East and Southeast Asian mills, Irepas said, adding that Gulf Cooperation Council countries were also offering low prices, making it impossible for Turkish producers to compete in the long products market.
“The Turkish market has become a battlefield for some exporting countries like Russia, India and China for some other products,” it said.
In China, iron ore prices had fallen to two-year lows amid renewed fears of more COVID lockdowns, Irepas said.
Platts, part of S&P Global Commodity Insights, assessed the 62% Fe Iron Ore Index at $87.95/dry mt CFR North China on Nov. 7, down 26% since the start of 2022.
The US and the EU markets were protected and not part of the competition in the global market, Irepas said, making competition high elsewhere, particularly in the Middle Eastern and Far Eastern markets, while freight rates were the only factor limiting competition in faraway markets.
“Freight rates are becoming more predictable, which may be considered as good news for the market,” Irepas said, adding logistic costs were slowly moving towards “normal” but were still at high levels.
Irepas described the current situation in the global long products market as unstable, with more negative news coming from the Russia-Ukraine war making outlook for the first quarter of 2023 also unstable and negative.
“The January-March period may be worse than the height of the pandemic, driven by lower prices in Asia and continuing impacts from the ongoing war in Ukraine,” Irepas said.
— Cenk Can
