Gloomy outlook from Irepas

Demand in the global long steel products market continues to lag behind supply, according to the latest short-term outlook from producers and exporters association Irepas.

With steel production and consumption volumes down in most regions, the outlook warns the bottom of the market may not yet have been seen.

‘Everyone one is expecting some move from Beijing, to slow down exports from China,’ it says. ‘The iron ore price has dropped down under US$ 110 per tonne and there is talk about it falling further unless Beijing comes up with something great for the market.’

Chinese steel is said to be looking for export markets while Turkey has export markets ‘but not at prices that can be financed without pain’.

‘Demand in the EU needs to improve. Otherwise, along with the continuing Chinese exports, Turkish mills will be forced to reduce production further.’

EU stagnation

Business in the EU is said to be in ‘total stagnation’. ‘This situation has been continuing in the EU for about a year now and there are no signs of improvement. Investments are still low despite the interest rate decrease and most of the cut and bend shops have free capacities such as they have never had for ages.’

Irepas notes that while this is situation is good for building and infrastructure, the overall mood is not with concerns that Europe is supporting old industry instead of investing in new industry and technology.

US satisfactory

In the US, however, demand is satisfactory, boosted by infrastructure projects, new renewable energy projects and some commercial construction. Residential construction is still slow due to high interest rates.

‘As far as supply is concerned, US domestic mills have built enough new capacity to meet all demand and therefore the price is at the same level or better than import prices, making imports not so attractive. Of course, Section 232 and additional antidumping and countervailing duties make imports even less viable.’

The outlook concludes: ‘The market can be described as unstable and fluctuating, with the exception of the EU where it is stable but at a low level. Market players are mostly in wait-and-see mode, but the outlook is unsatisfactory and in line with the international political outlook.’