IREPAS: Still improving supply-demand balance creates brighter picture in global longs market

The supply-demand balance continues to improve in regions like the US, Europe and Asia, contributing to a brighter picture in the global long steel products market, according to the short-range outlook report issued by IREPAS, the global association of producers and exporters of long steel products. 

 

 

Demand has improved in the US as buyers have been restocking. In addition, President Trump’s promise to spend one trillion dollars on infrastructure has hyped up the market even more. However, the reality is that it will take two to three years down the line to start such projects and they will all have a “Buy American” clause which will not excite importers. 

 

 

In the immediate term, import supply into the US will be affected by the preliminary duties in the antidumping and countervailing duty investigations being somewhat higher than expected against imports from Turkey and being outrageously high against imports from Japan. Nevertheless, IREPAS assumes that the margins against Turkish and Taiwanese imports will allow trade flows from these sources to continue, but the same will not be the case for imports from Japan. The resolution of the antidumping investigation against reinforcing bar imports in to the US may help end uncertainty and take the market up another step.

 

 

In other areas where exports have been adversely effected by restrictions imposed in destination markets, suppliers are finding new alternatives. 

 

Demand in China is also good and prices there are on an upward trend. It seems highly likely that China has indeed taken over 80 million metric tons per year of production out of the market, as its export volume has been reduced significantly despite its huge domestic output. The result is that Turkish products are more competitive in the export markets. 

 

EU mills, on the other hand, are not able to increase prices significantly although demand is very good in Germany, the Netherlands and the UK. 

 

Having said all the above, demand in Latin America remains weak with no sign of recovery in the short term, despite the overall positive expectations. 

 

Business sentiment in the global long products market is pretty positive and keeps improving, though there have been fluctuations in certain areas due to ongoing instability, the IREPAS report noted. Buyers and sellers agree that multiple markets are gaining strength simultaneously, while antidumping uncertainties are now out of the way for imports into the US at least for the time being. Prices and spreads are stable at higher levels than those of the previous year. However, global production has started to move up, which is not good. Chinese mills should receive good domestic demand in March in line with their anticipations, so that the supply-demand balance should remain as it is in the global market, IREPAS expects. 

 

Ferrous scrap prices are up and maintaining their strength, which should keep the actual cost of production at current levels at least for a while. With the “Buy American” provision, the IREPAS report foresees fewer exports of ferrous scrap from the US. Even an increase might be witnessed in scrap exports to the US depending on future developments, which could lead to a shortage of scrap in the market. 

 

Competition in the global long products market is still strong but within reason. Lead times for delivery of raw materials have increased. 

 

 

According to IREPAS report, it is difficult to predict the market in the short term. The outlook is satisfactory to very good in certain areas and prices should increase due to the recently announced preliminary antidumping and countervailing duty rates against imports into the US. However, there are still too many factors outside of the regular trade causing a certain degree of unpredictability.