Long steel markets uncertain amid war in Ukraine, Irepas says

The International Rebar Producers & Exporters Association (Irepas) has described the war in Ukraine as a major game-changer for the global long steel market in its most recent short-range outlook, published on the group’s official website.
“The war in Ukraine has changed sentiment in the global long steel products market as well as fundamentally altering the flow of raw materials and finished products almost overnight,” it said in the post on April 5.

“There is more demand than secure supply in the market,” it added. “Before the war, the expectations were that demand would determine the direction of prices, contrary to 2021, when supply was the driving factor. Today, however, supply has definitely taken the lead again and the market is in fact distorted.”

Under the current circumstances, the association described the market as fluctuating and unstable, and added that the outlook was very uncertain because the fundamentals could change daily.

The absence of Ukraine from the global raw materials and steel market, due to disruptions to production, as well as the absence of Russian suppliers, which were facing growing numbers of sanctions measures, has quickly changed the supply-demand balance in favor of suppliers in other countries, thus opening new opportunities.

“Disruptions to supplies of semi-finished and finished products have opened new opportunities for others, especially for Turkish mills which share the same geographical region,” Irepas said.

“Nobody has any clue how far this madness will go, but one thing is for sure: the sanctions on Russia will remain in place for some time to come,” it added.

“Scrap exports from Russia and Ukraine are almost at a standstill. European steel mills have refused to pay more for scrap, and have reduced their capacity utilization rates. There have even been complete shutdowns in some cases, creating extra supply of scrap in the market for Turkish mills,” it said.

“As a result, the Turkish mills have compensated for the missing quantities from Russia and Ukraine with the extra availability of European scrap, which has helped them to keep scrap prices under control, while at the same time they are exporting extra volumes of steel to the EU market,” the association added.

Besides Turkey, the association noted an increased flow of Asian material into Europe.

“European steel prices are now the highest in the world,” the association said. “Asian and especially Chinese prices are substantially lower than anywhere else. The steel trade is changing direction from selling to Asia to buying from Asia.”

Fastmarkets’ most recent weekly price assessment for steel wire rod (mesh quality), domestic, delivered Northern Europe, was unchanged at €1,300-1,350 ($1,416-1,470) per tonne on April 6. This price was the highest recorded by Fastmarkets, beating the previous record of €900-930 per tonne set on August 18, 2021.

Meanwhile, the price assessment for steel wire rod (mesh quality), export, fob China main port, was $850-860 per tonne fob on the same day, up by $20-30 per tonne week on week. It remained at that higher level on April 12.

The cost of freight from Asian ports to Europe was recently reported to have doubled to around $200 per tonne because carriers demanded payment for the return trip as well.

Even considering this fact, however, Chinese prices were still attractive for European buyers.

In the United States, supply and demand of long steel products was satisfactory, the association said. But considering that mills were running at full capacity, it was fair to expect that any increase in demand would have to be met by imports, it added.

“Import restrictions and therefore prices from regular suppliers have increased dramatically in the US due to the war in Ukraine,” Irepas said. “With this, the prices in the US are also on an upward trend, catching up with the rest of the world.”

Published by: Vlada Novokreshchenova