The overall business environment in the global long steel products market has worsened further, as demand remained subdued while high supply continues to put pressure on prices and margins, the International Rebar Producers & Exporters Association, or Irepas, said in its latest short-term outlook issued July 8.
“However, in addition to the positive development represented by the easing of tensions in the Middle East, some producers are heard to have begun lowering production in response to market conditions, which should help improve the supply-and-demand balance over time,” the association said.
Noting that demand was hit by low confidence, Irepas said more supply of Iranian and Russian billets could depress rebar prices.
Platts, part of S&P Global Energy, assessed CIS export billet at $462/metric ton FOB Black Sea July 7, unchanged from the previous day. Platts’ assessment for Turkish import billet was at $490/mt CFR Turkey July 7, unchanged from the previous day, while tradable values were reported between $480-$490/mt CFR Turkey, or $452-$462/mt FOB Black Sea, considering $28/mt freight.
“As far as costs are concerned, with energy demand increasing amid the seasonally high temperatures, the higher price of power will also work against producers’ interests,” Irepas said.
“Despite the announcement of the quota reduction by almost 50%, EU mills had been able to raise their prices for a while, but now their prices are falling back to where they were before, as demand is weak all over the EU,” the association added.
Looking at Asia, Irepas said there was “nothing positive” in the region apart from a gradual decrease in production in China. However, it added that this would not change anything in the short term, noting that Chinese steel exports continue to increase.
In the Middle East, it said that greater stability could support a gradual recovery in economic activity and steel demand, particularly in the Gulf markets.
“This suggests that reconstruction needs and investment could provide support for the market once geopolitical conditions normalize. These developments give reason for cautious optimism about the medium-term outlook,” it said.
Author: Cenk Can
