Longs market uncertainties heightened by Ukraine war

Oversupply in the global long steel products market is getting worse, according to Irepas, the international organisation for rebar producers and exporters.

‘There is a vacuum in Western markets due to the war in Ukraine,’ it says in its latest short-range outlook. ‘Price hikes were very rapid and very steep, which could be a reason. Energy prices have negatively impacted manufacturing, especially in Europe.’

Irepas also notes that inflation is having a negative impact on consumption but finds it difficult to understand why the market has been quiet during recent weeks and what has caused scrap prices to drop by significant margins.

But it adds that reinforcing bar mills in the EU are in a good position to maintain their prices at high levels despite lower demand and internationally weakening prices because Turkish and Algerian imports have been out of the market since quotas expired in early April.

The outlook notes that, despite trade restrictions, Russian semi-finished products have found destinations in Asia and Turkey via trading intermediaries. As a result, the pricing premium on ferrous scrap which followed the Russian invasion of Ukraine is said to have deteriorated during April.

Competition in the global longs market remains very regional due to trade measures,’ Irepas says. ‘The war in Ukraine and the worldwide uncertainty does not help the markets to resume their normal business mode. The situation is very challenging when trade is very intermittent and so competition is not very intense.’

Meanwhile the US dollar has been trading at a five-year high against the euro and this has put pressure on the commodity and ferrous metals sectors.

The outlook concludes that the current market situation is ‘fluctuating and unstable as market demand is intermittent’. However, the outlook is still very good and satisfactory despite being challenging in certain regions.’