Commenting on prices during the last session of the SteelOrbis 2020 Spring Conference & 82nd IREPAS Meeting held in Belgrade, the chairmen of the IREPAS committees said that, as the winter months are being left behind, an increase in demand can be expected and also that materials will be shipped to Europe as the opening of the new quota is approaching. All this will help the recovery of prices, they commented. The producers committee chairman said that for rebar there are almost zero margins between scrap and rebar and that demand is being affected by both political and economic circumstances and by the virus outbreak. He went on to say that, since margins are where they are, it would seem the market is at an equilibrium near the bottom, unless scrap and iron ore prices fall. On the other hand, the raw material suppliers committee chairman pointed out that, while manufacturing seems to be picking up in the western world, short-term pricing trends are pointing in a negative direction due to the current circumstances.
Regarding US demand both for domestic rebar and rebar imports from Turkey, the chairmen said that demand for long steel products in the US domestic market is good and stable, while Turkish mills have concluded same sales to the US. The committee chairmen expressed the belief that shipments from Turkey to the US will be seen regularly but to catch the numbers which were seen prior to Section 232 will not be possible as Turkish mills are subject to AD and CVD rates on top of the Section 232 tariff. If domestic rebar prices in the US go up in March, there could be some more exports from Turkey, they noted.
Commenting on scrap prices, the IREPAS committee chairmen said that they expect scrap to continue to see a volatile period. Uncertainties and protectionist measures have had impacts and will continue to play a role in pricing going forward. Under a neutral scenario, iron ore prices are expected to range between $75-90/mt, while scrap prices are expected to range between $240-280/mt.
In answer to a question on whether the Section 232 tariffs could be revoked under a new president given the elections in the US in November this year, the chairmen said that there is presently no political gain for either Democrats or Republicans to repeal the tariffs. There could be an “adjustment” to them, which could be either to tighten or to loosen the tariffs.
Lastly, talking about the IMO 2020 regulation, the chairmen said freight rates have fallen to new bottom levels although they had been expecting to see an increase because of the new regulation which limits the sulphur content of ship fuel. They indicated that world trade has been reduced and that vessel operators are facing the same issues as the steel industry, i.e., lack of margins. The major bulk scrap routes have been impacted by a 10 percent hike in freight costs. The regulation will likely promote shorter routes as longer routes mean more costly bunker fuels have to be used. The committee chairmen also underlined that this new regulation will result in the further regionalization of the global steel trade.