Longs market enters holidays, trade challenges loom: Irepas
The global long steel market has entered the holiday season, with significant business activity expected to resume only after 13 January.
Chinese export pressure on global markets, Europe’s steel sector challenges due to high energy costs and weak demand, which has already led to shutdowns, and potential policy shifts in the US are further adding to uncertainty, Kallanish notes from the International Rebar Exporters and Producers Association (Irepas) December outlook.
“Under these circumstances, the situation in the global longs market, where competition remains very tough and more local than global, may be described as unstable and complicated with a difficult, unpredictable outlook,” Irepas forecasts.
Irepas suggests Chinese steel exporters may not have full export order books for the first quarter of 2025 as overseas demand and prices continue to decline. Therefore, “steel prices in the international markets, except in the US, will suffer going forward,” it adds.
Chinese stimulus measures are expected to have a limited impact on limiting steel export volumes in the short term. Domestic prices in China remain low, while production cuts are unlikely, as “Chinese Premier Xi Jinping has pledged that China will meet its ambitious GDP growth target of 5% this year and remain the engine of global economic expansion, and so no production cuts would be anticipated,” Irepas explains.
EU producers are squeezed between weak demand and high costs, limiting their ability to reduce prices while competing with imports. Energy prices in Europe have surged to 2022 levels, prompting mills to temporarily halt liquid steel output or reduce production hours to control supply. “Usually, this would push prices up, but in the current low season, we have to wait and see what happens,” Irepas notes, adding: “It is a good sign that prices have not slid down any further [in the EU].”
In the US, a “not-so-pleasant winter” is expected. “US domestic mills have been keeping prices low and are still offering discounts on already low prices,” Irepas says. “On the other hand, US domestic scrap pricing for December is expected to be down, for the first time in two decades.”
Although interest rates have slightly eased, they remain high for investments. The steel trade may soon become more difficult due to looming additional duties proposed by the new US administration. These duties could trigger retaliatory measures from other countries, further complicating global long steel trade.
Elina Virchenko UAE
IREPAS Short Range Outlook: December 2024
The International Rebar Exporters and Producers Association (IREPAS) has published a Short Range Outlook for December 2024, offering an analysis of global market dynamics in the steel and rebar industries.
Global longs market enters holiday season, but deep uncertainties lie ahead next year
The global long steel products market has mostly entered the holiday period. In many markets, business will start moving only after January 13. Many uncertain factors lie ahead for the post-holiday period, including the situation regarding Chinese exports, the actions likely to be taken by the new US administration and the difficulties faced by the steel industry in Europe.
Chinese stimulus measures so far not expected to have huge impact on exports
In the short term, the Asian markets are speculating on the positive sentiment from China, but it is hard to see how it will convert into real upward movement. It seems the Chinese government is going to make another attempt to increase liquidity to stimulate domestic demand. However, domestic prices are still very low in China and so the potential short-term impact on exporters will probably be limited and they will not change current export volumes until the Chinese steel industry slows down production. However, Chinese Premier Xi Jinping has pledged that China will meet its ambitious GDP growth target of five percent this year and remain the engine of global economic expansion, and so no production cuts would be anticipated. As a result, steel prices in the international markets, except in the US, will suffer going forward.
What are the prospects for Chinese steel exports in Q1?
The important sectors in the Chinese domestic economy, steel in general, and construction and manufacturing, are all in deflationary mode. Steel exports from China have increased during the fourth quarter. It is yet to be seen if Chinese exporters have already booked export orders for the first quarter. They may not have full export order books as demand and prices from overseas customers have fallen further and quantities are less.
Energy prices in Europe surge to 2022 levels, mills announce shutdowns
In the meantime, energy prices have surged to very high levels again in Europe, levels not seen since 2022, and mills in the region have started announcing shutdowns. Usually, this would push prices up but in the current low season we have to wait and see what happens.
Weak demand in Europe, luckily prices have not fallen even further
The market in Europe is still extremely challenging. Domestic producers are holding prices low to fight against imports and to collect any orders they can. But there is no way for them to reduce their prices further as their costs simply do not allow that. Demand is very weak. Many benders are still accepting long-term projects at price levels which do not correspond to current replacement costs. Mills are taking measures to reduce offers by working shorter hours or stopping liquid steel production for a few months. Nevertheless, it is a good sign that prices have not slid down any further despite the approach of the end of the year.
New US administration may trigger even greater difficulties for global long steel trade
Trade in the global long steel products market may enter a period of even greater difficulties with the change in the US administration. Proposed additional duties may trigger other countries to retaliate and it may soon become more difficult to trade globally.
Difficult winter anticipated for US domestic steel market
US domestic mills have been keeping prices low and are still offering discounts on already low prices. In addition, most US buyers, not trusting import price guarantees, refrain from ordering their usual quantities. Interest rates have eased a bit, but are still on the high side for investments. In short, a not so pleasant winter is expected in the US steel market. On the other hand, US domestic scrap pricing for December is expected to be down, for the first time in two decades.
Market is unstable with difficult and unpredictable outlook
Under these circumstances, the situation in the global longs market, where competition remains very tough and more local than global, may be described as unstable and complicated with a difficult unpredictable outlook.
Source: irepas.com
IREPAS Short Range Outlook : November 2024
Gloomy demand picture prevails in global longs market, but possible bright spots on horizon
The supply and demand balance in the global long steel products market is being impacted strongly by low demand and it is reasonable to expect that, if the US introduces new market protection measures, other countries will follow. There is simply not enough demand in the world for all the steel produced. Despite the overall gloomy scenario of mostly insufficient demand, on the bright side China has continued to announce measures to stimulate its economy, while the incoming Trump administration could take steps towards ending the war in Ukraine and bringing about a ceasefire in the Middle East, which would boost the steel markets.
Chinese exports to continue, impact of stimulus measures remains to be seen
The global long steel products market is looking to find ways to extricate itself from the desperate situation it is in. Unfortunately, exports from many countries, starting with China, are not helping at all. While production in China drops, its consumption declines even more, and so its exports increase. China has introduced stimulus packages and measures to resolve the problems of its weak real estate and construction sectors and excess steel production capacity. In China’s most recent stimulus package, financing of RMB 10 trillion ($1.4 trillion) will be provided to enable local governments in the country swap debts at high interest rates with debts at lower interest rates, which is intended to bolster economic activity nationwide. Nevertheless, the Chinese are on their way towards a record year of exports and will export more this year than the total steel production of the US and Canada combined. It remains to be seen whether this situation will change in 2025 under the impact of the stimuli the government has announced. China may indeed need to take further action, similar to the situation in 2016, and it is best if such action is taken before the Chinese New Year holidays.
US remains bright spot in terms of demand, India to see strong rise in steel consumption
The US remains a consistent source of demand in the world. China’s share of global exports and its trade surplus, meanwhile, have hit a new high. It is not a healthy situation and the US will be taking measures to curb Chinese exports. Looking forward to 2025, it is worth pointing out that worldsteel expects 1.2 percent growth in global steel consumption next year, with a 4.2 percent increase foreseen in developing countries, excluding China, while steel consumption in India is predicted to rise by 8.0 percent and consumption in the developed world is expected to grow by 1.9 percent. In particular, the increase foreseen for India is especially noteworthy.
EU market depressed by low demand, overwhelmed by imports
The EU is suffering from low demand and is overwhelmed by imports. Quotas expire very quickly from the day when they are opened and new exotic suppliers have been finding their way into the EU market.
Outlook for Europe and Germany deteriorates
Europe, and in particular Germany, is in a recession. Finally, all the rules and regulations imposed by the EU and the German government over recent years, combined with great geopolitical uncertainty and stagnating international economies, have hit Europe with full strength. What was expected six months ago is finally reaching the man in the street, who is now feeling that the times of non-existent unemployment are coming to an end. Investments are reduced in all fields of the economy and private spendings are at an all-time low, despite the high salary increases of the last two to three years.
Building industry experiencing a tsunami of empty order books
The building industry is experiencing a tsunami with order books as empty as they were 15 years ago. Unfortunately, no light at the end of the tunnel is anticipated in 2025. Such a consolidation in the cut and bend industry in Germany has never been seen and it seems like this is only the beginning.
All eyes on US after Trump’s re-election
After the recent US election, moves to “get America going again” are expected to be seen. Tariffs are on the table and if equally distributed they may create opportunities for the countries already struggling under the Section 232 duties. However, apart from Mexico, other exempt countries may not receive additional tariffs for their steel. Other products like automobiles, wine, etc., may be affected. China will be the biggest loser in terms of future export opportunities to the US. For this reason, it may be more aggressive in its export strategies without worrying about the global reactions. As for US steel, in the short term, US steel prices will go up with the anticipation of new duties. The easing of interest rates will also stimulate the domestic construction industry. However, the situation may level out by the second quarter next year. Additionally, on the positive side, there are hopes that the new Trump administration will focus on bringing the war in Ukraine to an end, and could also step up efforts to bring about a ceasefire in the Middle East. Such developments would have a huge impact in terms of regional security and provide a strong boost to economies and markets worldwide.
Interest rate cuts offer some hope
On the other hand, interest rate cuts have started in some economies and they may push up commodity prices further if they are continued. In particular, some Europeans are hopeful that business will pick up in 2025.
Markets undergo further fragmentation
There has been a further fragmentation of the markets. Aggressive competition is observed in open markets and fair demand in domestic markets. Competition inside the US is heating up as some products are unable to contribute to fixed costs. Mills in the EU are competing hard with each other to grab every ton available as long as their sales manage to cover their costs. Competition from imports is getting weaker and weaker in the EU as international prices do not attract buyers due to the very small advantage compared to domestic prices and with long lead times making imports too risky.
Unstable and fluctuating global market to continue to face lack of demand
Under these circumstances, the global long steel market can be described as unstable and fluctuating as there is a lack of demand. Unfortunately, the outlook for the market is not so bright, as it still points out to a continuing lack of demand and further fluctuations.
CBAM is step forward but not enough to rebalance global markets, European IREPAS conference attendees say
CBAM, a carbon tariff for all carbon-intensive products imported into the European Union, was passed by the European Commission in December 2022 and its transitional phase began in October 2023.
Starting in October 2023, buyers of goods originating outside the EU must purchase certificates which equal the total emissions in the production of the goods.
There is no limit to the number of certificates that can be purchased to avoid restricting trade.
The cost of these certificates are calculated by the European Commission on a weekly basis according to the average price of the closing EU Emission Trading System (ETS) carbon dioxide (CO2) allowances for each week.
Impact of CBAM
CBAM can help to address imbalances related to European companies who are constrained by carbon taxes attempting to compete with countries who are not subject to any regulatory strictures, Louis Redshaw, Founder of Redshaw Advisors, told IREPAS attendees.
CBAM will help reduce carbon leakage, Redshaw said.
Carbon leakage was described when, for reasons of costs related to climate policies, businesses were to transfer production to other countries with more relaxed emission constraints, in turn resulting in an increase in their total emissions.
By placing a fair price on the carbon emitted during the production of all carbon-intensive products entering Europe, European mills, who currently need to pay for carbon credits equivalent to their carbon emissions, will be on a more equitable basis with importing countries who do not currently have the same taxes in place.
Some European market participants, however, were skeptical about how effective CBAM would be in rebalancing the playing field.
Carbon credits
European companies must buy carbon credits, normally from the government, to produce steel. When a company buys a carbon credit they can generate one ton of CO2 emissions.
The development of carbon credits turned carbon dioxide into a commodity, which could be monetized like any commodity.
Currently, the top 10% of the lowest emitting steel producers in Europe do not pay for carbon credits, while the remaining 90% of European steel producers have to pay varying amounts for carbon credits to offset their carbon emissions.
Pre-CBAM, European domestic mills were burdened by the cost of climate policies which non-EU countries were not, making them uncompetitive.
“CBAM will help to make competition fair. If importers are not taxed similarly to European mills, the European steel industry will die,” Redshaw said.
The greater a producer’s emission, the more they need to pay for carbon credits, thus incentivizing them to invest in decarbonizing processes.
By ensuring all countries importing steel into Europe have to pay similar amount, sustainable goals do not stop EU countries from being competitive or profitable.
Market responses
Many conference attendees felt that CBAM could help support European mills remain competitive when faced with so many economic challenges.
Some non-European exporters who were already providing CBAM certificates to buyers in Europe importing their stock, reported high levels of bureaucracy involved with submitting the correct information quarterly.
“It will help to put a fair price on the carbon emitted. Steel producers in Egypt who export to EU have already been asked to fill in necessary paperwork for CBAM. This is a very bureaucratic procedure and may become a burden in the future for producers,” a producer source from Egypt told Fastmarkets.
“CBAM will help support European mills and global targets towards becoming more sustainable,” a second producer source from Egypt said.
Skepticism
Some sources, especially in Europe, did not think CBAM would either encourage global decarbonization or significantly rebalance global markets.
CBAM has put a cost on carbon, but it is not enough to counter the other factors which have resulted in a lack of balance in the global markets, these sources said.
These factors included foreign country subsidies, lower gas and electricity costs, lower labor costs and lower or no regulations in the construction sector, the sources added.
These more skeptical market participants felt that by just putting a price on ‘carbon’, other key areas which required addressing were not being considered.
“Europe has been affected and limited by its own desire to become carbon efficient and this has been a contributing factor to Europe losing market share of steel production, weakening domestic demand and becoming uncompetitive domestically,” a German trader said.
Europe is currently trying to decarbonize, digitize and remain profitable, sources said. But, at least in the short term, the goal of decarbonizing is at odds with the goal of profitability, Fastmarkets heard.
“European producers don’t just have to deal with the carbon issue, they also have to deal with high energy costs because of high taxation on energy and renewable energy transformation and high energy costs and importing expensive raw materials and finding the money to invest in decarbonizing technology,” a producer source from Spain said.
Whereas there is a lot of pressure from every side to transition to low-carbon environment in Europe, this is not the same in non-EU countries.
In other countries, for example China and Algeria, where the steel industry is buoyed up by subsidies, carbon tariffs like CBAM will not incentivize them to decarbonize.
“China will just pay the increased costs with the massive government subsidies they receive. They will continue to emit just as much carbon and will continue to have far lower costs,” a trader at the conference said during a panel discussion.
“Even with CBAM and all countries importing into Europe having to pay for the cost of their carbon footprint, they still remain more competitive because of cheaper energy costs and cheaper labor costs,” a second producer source from Europe said.
Seven key things Fastmarkets learned during Irepas Fall 2024 meeting
More than 490 delegates from around the world gathered in Paris on September 15-17 to network and to participate in this key event for long steel producers.
Here are the seven main topics that were discussed at the conference:
Chinese dominance
China’s dominance in the international steel market has strengthened over the past year amid a drop in domestic demand and insufficient production cuts, and it was highly likely to continue in 2025.
Yeoh Wee Jin, secretary general of the South East Asia Iron & Steel Institute (SEAISI), described this year’s events in China as “a third tsunami” during a panel at the Irepas event. He expected the country’s steel exports to exceed 100 million tonnes this year, compared with 89 million tonnes in 2023.
Fall in iron ore prices
The decrease in steel production in China resulted in a fall in iron ore prices, as well as the accumulation of a significant stock of iron ore. Wilhelm Alff, chairman of the Irepas traders’ committee, said that iron ore stocks at Chinese ports currently totaled 149 million tonnes.
Fastmarkets’ daily index for iron ore 62% Fe fines, cfr Qingdao, has averaged $91.87 per tonne so far in September, compared with an average of $135.03 per tonne in January this year.
Meanwhile, scrap collection in Europe and the US has slowed down, Jens Björkman, the chairman of the raw material suppliers’ committee, said. This helped to support prices for the product despite delayed demand in Turkey.
The Middle Eastern country has switched to purchases of Chinese steel billet since the summer, when prices for the material became low enough to make production of rebar from billet more attractive than from scrap.
Fastmarkets’ daily index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey, has averaged $363.36 per tonne so far in September, compared with $414.12 per tonne in January 2024.
Consequently, iron ore prices fell by almost 32% in the period under consideration, while those for scrap fell by 12.23%, making the blast furnace steel production route more profitable.
“Everybody wants to be a blast furnace-based steel producer for the next six months,” Alff said.
Shift in Turkey
Chinese steel prices remained attractive, including those for billet, so it was highly likely that Turkey would continue to meet its needs through billet imports, which would result in lower steel output in the country.
This situation could also exert pressure on scrap prices.
Trade defense
Turkey itself was limited in its long steel export opportunities at the moment, considering the imposition of trade defense measures in the US and in Canada, the almost-complete take-up of import quotas in the EU for the third quarter of 2024, with tonnages already sold for delivery in the fourth quarter, and with recent restrictions on the supply of steel products to Israel.
Some countries that formerly procured long steel from Turkey – such as Egypt, Algeria and states in the Gulf region – have become exporters themselves, according to the chairman of the Irepas producers’ committee, Murat Cebecioglu.
Yemen, plus a few other countries in the Middle East, and Latin America were currently the key destinations for Turkish long steel exports, he added.
Regional differences
Looking at the EU, Cebecioglu said that business has seemed to be at a standstill in the region for more than a year, and little or no improvement was expected in the next six months or so, a point on which other delegates at the event agreed.
Gulf Co-operation Council (GCC) countries were currently in a slightly better position than those in other regions because their economies were moving in the right direction.
New projects in Saudi Arabia, for example, were creating demand in the region, with the construction and real estate sectors being the driving forces.
Yeoh said that ASEAN economies were also growing, albeit more slowly because of the generally unfavorable situation globally. He said that the construction sector was booming across the region, except in Thailand. Meanwhile, manufacturing was weakening, mainly due to soft external demand.
Earlier this year, he said that ASEAN steel demand was expected to reach 76.5 million tonnes in 2024, up from 73.5 million tonnes in 2023.
Overcapacity in Asia
Meanwhile, unsustainable overcapacity and de-greening were in prospect in Southeast Asia, with at least 104.4 million tonnes per year of new capacities expected to come onstream by 2030. These would push the region’s total capacity to 181.5 million tpy if they were all implemented, Yeoh said.
Around 83.6 million tpy of new capacity would be based on blast furnace-basic oxygen furnace technology, Yeoh said, while only 20.8 million tpy would be based on direct reduced iron (DRI) and electric-arc furnace (EAF) capacities, and this would lead to an “explosion” of greenhouse gas emissions by the region.
Decarbonization
At the same time, Europe’s imposition of its CBAM regulations and the global trend for decarbonization were other major topics at the Irepas event.
Since its start in October 2023, buyers of goods originating outside the EU must purchase certificates corresponding to the total volume of greenhouse gas emissions created by the production of the goods.
The costs of these certificates are calculated by the European Commission on a weekly basis, related to the average price of the closing EU Emission Trading System (ETS) carbon dioxide (CO2) allowance for each week.
By placing a fair price on the carbon emitted during the production of all carbon-intensive products entering Europe, European mills that currently must pay for carbon credits equivalent to their carbon emissions will be put on a more equitable basis with producers that operate in exporter countries that do not impose similar taxes.
Opinions were divided on the effects of the CBAM rules on the European market – and beyond it. Many delegates to the Irepas event felt that CBAM could help European mills to remain competitive when faced with economic challenges. Some sources, however, did not think that CBAM would either encourage global decarbonization or significantly rebalance global markets.
CBAM has put a cost on carbon, but it was not enough to counter the other factors which have resulted in a lack of balance in the global markets, these sources said.
These factors included foreign country subsidies, lower gas and electricity costs, lower labor costs, and fewer or no regulations in the construction sector, the sources added.
Global overcapacity was also expected to slow the decarbonization transition and to hamper innovation, Luciano Giua, economic and policy analyst at the Organisation for Economic Cooperation & Development (OECD), said during the event.
Published by: Vlada Novokreshchenova, India-Inés Levy
IREPAS in Berlin : Weak demand, great uncertainty and aggressive Asian exports
The 90th meeting of IREPAS (the International Rebar Exporters and Producers Association) was held in Berlin on April 28-30 in conjunction with the SteelOrbis Spring’24 Conference.
There were 104 representatives from 41 different producers among the 445 registered delegates from a total of 57 different countries. There were also 91 registrations representing 52 different raw material suppliers.
At the opening of the conference, Murat Cebecioglu, chairman of IREPAS, emphasized that demand in the global long steel products market continues to lag behind supply. He added that the situation was getting worse because of China’s aggressive export policy and that Chinese exporters would continue to be aggressive, which of course would drive other Asian exporters to be aggressive also.
The IREPAS chairman said the situation in the global long steel products market is deteriorating, adding that there is huge uncertainty on what the next couple of quarters will bring for the global long products market, where it seems the situation will be extremely difficult.
On the last day of the conference, producers of long steel products, as well as traders and raw material suppliers, shared the conclusions reached at their special committee meetings regarding the current situation in the markets with the general participants at the event.
Raw Material Suppliers at IREPAS: General market mood hopeful for improvement
Jens Björkman, the chairman of the raw material suppliers committee, summarized the committee meeting findings regarding the general situation in the global steel and raw material markets, noting that the markets have been struggling this year compared to the past few years amid the worsening of economies due to high inflation and interest rates. However, he stated that the general mood is hopeful for a return to something slightly more forward-looking and optimistic.
Regarding Western countries, he stated that high interest rates and inflation have been putting pressure on scrap generation in the US and the EU, and added that the interest rates in the EU are expected to be cut during the spring. With the anticipated increase in scrap demand due to electric arc furnace investments especially in the US, Canada and Europe, Mr. Björkman noted that scrap flows will change significantly in the next 10 years, regionalizing scrap generation where scrap demand is high. In addition, he stated that steel producers have started to look for alternatives to scrap like pig iron, HBI and DRI to cover their needs for raw material. Indicating that scrap generation in Europe is down by 15-50 percent depending on the part of the region, Björkman said that, with the Carbon Border Adjustment Mechanism (CBAM), European scrap suppliers will try to keep scrap volumes within the regional market, reducing scrap exports from the region especially to Turkey, which operates mostly with electric arc furnaces and has significant demand for scrap.
Looking at China, noting that the country’s economy was expected to rebound after the Chinese New Year holiday but that these expectations did not materialize, he stated that China’s economy is going through a period of normalization. Meanwhile, pointing out that before the recent rebound iron ore prices had fallen to $100/mt CFR in the first quarter this year from the higher-than-expected level last year of $120/mt CFR, he said that the factors contributing to the price drop included high iron ore inventories at Chinese ports, slow demand and lower steel production. He concluded by saying that the market in China is adjusting to the lack of recovery of demand after the Chinese New Year holiday, adding that he expects iron ore prices to remain at quite high levels.
Traders at IREPAS: Global demand to be supplied locally, market conditions lead to regionalization
F. D. Baysal, the chairman of the traders committee, stated that there is demand globally but that it will be supplied locally, adding that ongoing trade tensions, global conflicts and political instability have changed trade routes, resulting in regionalization.
Looking at the other factors that lead to regionalization, Mr. Baysal expressed the view that the EU’s safeguard measures will be extended for another two years and that its quota volume adjustment will be minimal if any. Regarding the EU’s Carbon Border Adjustment Mechanism, he stated that it will put pressure on other countries, especially on blast furnace-based producers.
Remarking that Turkey’s export markets have been limited due to the US safeguard measures, the EU quota restrictions and the geopolitical tensions in the Middle East, the chairman of the traders committee stated that there are still some export opportunities for the country, including Syria, Iraq, eastern Europe, Africa and possibly Yemen. In addition, noting that the shipping crisis in the Red Sea has affected freight rates and container shipments a lot more than bulk shipments, shipments had to be shifted from containers to bulk, leading to additional costs.
Looking at China, Baysal said that the low steel demand in the country amid cancelled infrastructure projects has resulted in an increase in the country’s exports, with China dominating the global market with its lower prices and higher quality of steel, leading the strong competition. He also cited the Chinese Metallurgical Industry Institute’s prediction for a 1.7 percent drop in China’s steel demand in 2024, after a 3.3 percent decline in 2023, while further noting that China’s steel export volume increased by 14 percent year on year in the first quarter, though the value of its steel exports during this period was down by 20 percent year on year.
Producers at IREPAS: Low demand and Chinese exports weigh heavily on global steel market
Murat Cebecioğlu, chairman of IREPAS and also chairman of the producers committee, shared with participants the conclusions reached by producers regarding the current situation in the markets. He said that the GCC region is more optimistic in terms of business given the big infrastructure projects in the pipeline there, while market conditions in Egypt are getting better and better as the country’s currency issue has mostly been resolved, though the Suez Canal crisis remains a challenge. In some EU markets, the economy is picking up and inflation seems to be under control, while in others demand still remains quite low.
Commenting on the situation in China, the hot topic at the conference, Mr. Cebecioğlu said that Chinese exports will definitely affect the global market negatively and will reach high levels as they did back in 2015. However, this time the number of export markets is limited because of protectionism and Chinese exports will be more problematic in terms of competition. He went on to say that, apart from China, Malaysia, Indonesia and Vietnam are also exporting heavily and competing with each other. This will affect other suppliers and, as one of the biggest long steel exporters, Turkey is already feeling the effects, the chairman of the producers committee noted. Chinese exports are also taking a toll on the EU market, which is also struggling with very low demand especially in the northern part of the region.
Other exporters to the EU have to deal with quota measures as well as the Chinese competition. Cebecioğlu said the EU will most probably extend its quotas for another two years and, with new suppliers such as the GCC and North Africa, things will be tough this year before picking up and getting better next year.
Responding to a question regarding how Turkish mills managed to increase production in the first quarter of the current year, the committee chairman said that, in terms of sales, the first quarter this year was much better than the corresponding period last year. Turkish mills were able to sell considerable amounts to the EU and, with the quotas opening up, they had a window for exports. Commenting on the reconstruction works in Turkey’s southern region which was devastated by earthquakes last year, Cebecioğlu stated, “Construction activity has already started in the region, and it is mainly the mills in the region that are benefitting from all this. Since export activity is very low, this gives these mills a little bit of a break, and also funding should not be a problem as these projects are being financed by the government.”