The Ukraine war is shifting trading patterns and creating new opportunities for steelmaking countries other than Russia and Ukraine, said participants at this week’s International Rebar Exporters and Producers Association (Irepas) meeting in Istanbul.
As one example, the war has created a nail supply shortage in the EU as Russia and Ukraine are the leading nail suppliers with a combined 90% market share.
India’s new export duties on steel and steelmaking raw materials, lockdowns in China and sanctions on Russian steel due to its invasion of Ukraine are having significant consequences on steel trade flow. Patterns have shifted, and if the sixth package of EU sanctions on Russia is implemented, there will be more unprecedented impact on the steel industry.
“Substantial price hikes have been witnessed due to panic buying as the war created a vacuum in semis and finished steel supply. However, prices are returning to the pre-war period, and scrap prices are at the bottom curve,” Seba International president F.D. Baysal said at the event attended by Kallanish.
“Undeniably, gradually softening prices of Russian billets to the nearest market, Turkey, suppressed Turkish mills’ scrap buying price level, as the last round of sales are levelled at around $440/tonne cfr [Turkey] for HMS 80:20 grade scrap,” observed a senior Turkish mill official.
“The Russian invasion has led to raw material shortages, supply chain disruptions, price hikes, and high energy costs,” commented Jens Björkman from Stena Metal International. “Some steel producers have idled their operations, and demand has turned negative due to increased inflation in the EU. The lack of finance for raw materials supply and credit insurance companies’ reluctance to avoid taking risks are lowering demand for steel and steelmaking raw materials.” Indian’s iron ore export duty will have little impact on prices as India is an insignificant global supplier of the raw material, he added.
“The magnitude of money is the primary factor in a country’s wealth and independence,” Özgür Demirtas, Turkish economy professor at Sabancı University in Istanbul, meanwhile explained. “As the US is the largest economy globally, its currency has a game-changing role globally. When US dollar liquidity increases, wealth will be felt. Taking previous years’ experiences as a reference, we will likely see a liquidity increase and a relief in the global economy within six and nine months. Then commodity prices will pick up, including steel.”
“The market fears the most from uncertainty. The more important huge food crisis is coming as Russia and Ukraine are the leading grain suppliers globally,” Demirtas concluded.
Burak Odabasi Turkey
