Irepas braces for dismal first quarter, EU uncertainty

The first quarter of 2023 could be the worst quarter for the global long products market in a long time, amid increasing raw materials costs, high energy prices and reduced business activity, says the International Rebar Exporters and Producers Association (Irepas).

The association said last month that the Q1 market may be worse than at the height of the Covid pandemic (see Kallanish passim).

Although mills are set to finish 2022 with strong earnings thanks to the first half-year, they will be forced to reduce output further next year in order to minimise losses on their balance sheets. Moreover, if they continue to maintain their production levels and sell at a loss, it is very likely they will face trade measures. “In these circumstances, it will take some more time for a new supply-demand balance to be seen in the market,” Irepas says in its December short-range outlook.

“Steel buyers in the EU market have started to become nervous about what will happen after the holidays, as the anticipated longer revamps by mills will very likely limit supply,” Irepas continues. “On the other hand, there is a big question mark over the weather conditions in the first quarter of next year. If temperatures remain mild, then demand for construction, which has been healthy so far, will pick up earlier and help mills to raise their prices.” Energy prices will ultimately underpin everything.

In the US, the new Buy American investment package will be in force from 1 January and “will be a huge challenge for the EU”, Irepas projects. “A new trade battle could be in the offing.” In China, meanwhile, the “quiet” potential dismantling of the zero-Covid policy may lead to increased steel demand post-Lunar New Year.

Adam Smith Poland