Market eyes post-summer restocking, reduced Russian supply: Irepas

Long products demand has disappeared almost everywhere and prices are down, forcing mills to curb output, with the market unlikely to improve in July or August, according to the International Rebar Exporters and Producers Association (Irepas). Given the low inventories, however, buyers will need to restock at some point, probably end-August or early September.

“It has become very complicated nowadays to use the word global when talking about the global long steel products market. It seems like there are different globes,” Irepas says in its July short-range outlook seen by Kallanish. “Steel mills in China are barely making money, while volumes are being suppressed both politically and by business decisions.”

In the EU, however, demand has rebounded amid the risk of energy shortages in the fourth quarter and is higher than usual in the holiday season. EU demand and prices are probably higher than anywhere else, but safeguard measures are preventing necessary imports. Other areas in the world have a big cost advantage as steel products are much lower in price and are giving benefit also to downstream industry and investors, Irepas observes.

US demand is also firm but rebar prices, which have until now held their ground, are expected to come down. “With the expectation that all prices will come down, future sales have become impossible,” Irepas says. Import cost prices have meanwhile started to go up in parallel with scrap prices. “In short, the US has become an even more difficult market for imports. Naturally, domestic mills with faster deliveries dominate the market,” it adds.

Although scrap prices have rebounded, meanwhile, the market remains very quiet.

“The low inventory levels in the market keep steel mills’ hopes alive for the fourth quarter, in addition to the news that Russian mills have reduced their export volumes due to their very strong local currency. Prices have started to move from very low and unhealthy levels to more sustainable levels,” Irepas concludes.

Adam Smith Poland