IREPAS: The uncertainty in the market is expected to continue for a while

According to a report released by IREPAS, the global association of producers and exporters of long steel products, the state of business in the global long steel marketplace varies from one region to another depending on the economic situation in the different regions.
 
IREPAS said that the long products market has been performing relatively better than the flat rolled market mainly due to better balance of supply and demand. However, the increased uncertainty in the EU and very slow demand has created a lot of doubts not only in the EU market but also in neighbouring markets, and has kept customers from placing new orders while forcing them to reduce their inventories even lower as of the second week of May. Furthermore, the sharp drop of the euro has been putting a lot of pressure on US dollar-denominated prices.
 
The uncertainty in the EU is expected to continue for a while as Greece will hold new elections. The steel buyers in the country seem to have decided not to buy until the uncertainty goes away.
 
On the other hand, demand in almost all other areas remains reasonable. Meanwhile, the North African market still lacks stability due to political issues and elections, which are expected to be cleared by the fourth quarter. However, the Middle East and the Persian Gulf are the most stable regions in terms of demand and growth. Demand in the Central and South American markets remains strong, and the Chinese and Far Eastern markets are also showing relatively good performances. In the US market prices were relatively stable, but there may be a further impact due to weaker scrap prices and the stronger value of the US dollar.
 
Steel continues to be produced, shipped and consumed despite all the uncertainties surrounding the market, while the automotive, agriculture and mining industries are still driving the demand for steel in the global marketplace.
 
Competition seems to be strong in the EU and the North American markets as the mills are looking for the best opportunities, particularly on delivery time and price. However, competition appears to be less strong in the Middle East, Asia and the Far East due to better demand. IREPAS notes that the Chinese currency has been revalued against almost all currencies except the US dollar and Yen.
 
The report predicts that the current uncertain and unstable status of the market is expected to be rebalanced after price adjustments. In the short term a low volume of trade may still be observed due to uncertain currency exchange rates, the holiday season and Ramadan. Customers are expected to come back into the market after price adjustments and the second half of 2012 is expected to bring demand back into the global market.