Slowdown in longs market pressures producers

New exporters in the rebar and wire rod sector are putting strong pressure on prices while the long steel market is slowing, according to the International Rebar and Producers and Exporters Association (Irepas).

The organisation’s latest short-term outlook reports ‘the global long steel products market is slowing down in general, which is putting pressure on producers’ and notes that the new exporters, notably Algeria, Egypt, the UAE and Saudi Arabia, are in the market with ‘very aggressive’ offers.

Irepas concludes: ‘The outlook for the next quarter is mostly unstable and unsatisfactory, except for ferrous scrap suppliers.’

National positions

Looking at national markets, business in the US remains stagnant with slow demand and supply, putting pressure on prices. Flat steel prices are still under pressure, the outlook adds, with flats mainly supplied from domestic sources.

Europe is said to have been very quiet in recent weeks due to the holidays. ‘Prices are very flat and there are no signs of improvement in sight’ attributed to low activity and low ordering from the market.

‘Overcapacities in the EU are preventing mills from raising prices. Imports are practically non-existent right now as one can see from the safeguard import statistics. All EU countries are trying to avoid a recession by injecting money into the economy, but the private sector is afraid due to all the uncertainties surrounding energy prices, interest rates and additional burdens which may come from Brussels in relation to CO2 emissions. All these uncertainties are holding the private sector back from investing.’

Both the US and the EU will produce less steel this year than last, Irepas notes. In the US, flat product output is down 5% year while domestic long product output is down even more. Meanwhile, stimulus packages introduced in China are reported to have had no impact on exports affecting global steel prices. China’s BOFs are reported to working at over 90% capacity utilisation and EAFs at under 50%.

Lower scrap demand

Turning to ferrous scrap, the outlook says: ‘European demand is expected to contract in the coming quarter. Although demand is slowing down for scrap also, inflows are dropping for scrap traders. Availability is low and this is exerting pressure on recyclers to get material to their yards and shredders. Scrap prices are still holding firm, mainly because suppliers are much more organised.’

The war in Ukraine continues to dog the market. The EU demands declarations from producers confirming no goods that are shipped into the EU have Russian input and US officials are reported to be warning individual companies of the risks of not cutting ties with Russia.
‘The halting of Russian steel imports in six weeks’ time into the EU should have a significant impact. It is difficult to prevail in defensive cases, which may cause Turkey to strongly reduce imports from Russia,’ it notes.

‘No competition’

The outlook says there is ‘almost no international competition’. ‘The competition is for volumes, not to increase them or simply to keep them stable, but rather to limit the slide in volumes as much as possible. Imports are dropping in North America and the EU, which of course affects the MENA region and Latin America,’ it concludes.