SteelOrbis' Fall '08 Conference & IREPAS 59th Meeting in Hamburg, Germany concluded Tuesday morning with reports on the the committee meetings which took place during the conference. The committees this year included representatives of producers, traders, raw materials suppliers, billet producers and rebar/wire rod producers. In general, all committees, while agreeing on the seriousness of the current market turmoil, see plenty of hope for a recovery.
The Chairmen of the committees which delivered the highlights for each meeting included: Ugur Dalbeler, Producers Committee; John Foster, Traders Committee; Ionnis Meimaroglu, Raw Materials Committee; Viktor Vukusic, Billet Committee; and Mohammad Al Saadi, Rebar & Wire Rod Committee.
Raw Materials Committee - Mr. Meimaroglu said that the group agreed that scrap collection is very low, and scrap demand is low as well. European scrap demand is significantly down, and the situation in the Black Sea and Mediterranean region is even worse. In India, factories have tremendous scrap stocks, as they have reduced production by upwards of 50 percent. Some companies have exited the market entirely. With the current crisis, he said, there is not much we can do but wait for the market recover. However, what raw materials suppliers, producers and traders can all do is take advantage of the current situation to work together and establish a new, stronger market.
Traders Committee - Mr. Foster said that the mood among the traders was, "in a word, subdued." Key points that the traders discussed include the need to continue the trust and cooperation built over the last few years, the need to avoid panic so as not to drive down prices further, and traders' crucial role in IREPAS. Future consolidation in the industry is expected, which should help the market. Inventory levels in the Middle East are concerning, but the US and Europe are in better shape, with relatively low inventories. The expected infrastructure projects that will take place in the US will help steel demand, he said, and the weak ocean freight rates will also help to facilitate trade. Most traders felt like we haven't quite hit the bottom yet, but we are close.
Billet Committee - Mr. Vukusic said a main point discussed in his committee was the situation of integrated billet producers and their high production costs during this weak time. Ukraine's position as a billet producer is the most vulnerable compared to other regions because it has the most integrated production. Russia, he said, is the opposite, as it has more EAF producers which have a better chance of maintaining production. However, Russia's continued billet production during this time of soft demand has the potential to disturb the balance of the market. A major trend seen this year in the billet market that was discussed among the billet producers is the shift in sale of billets to the Middle East region, which added to the current oversupply situation in the Middle East. There is still a lot of unsold material in the market, Vukusic said, but the billet producers agree that if they strive for balance, they will be able to restore the confidence that is needed.
Rebar & Wire Rod Committee - Mr. Al Saadi summarized the main points discussed in this committee. Rebar consumption is reduced significantly due to the financial crisis, which is the main problem that has affected all sectors, he said. Speculation that took place when prices were increasing is also part of the problem. It is now a matter of getting rid of existing stock. There are no buyers, but producers are cutting production, which will help. Things should go back to normal, but not for at least a couple of months. Demand should remain intact, as the numerous projects in the Middle East should continue through at least 2009.
Producers Committee - Mr. Dalbeler said that while he was depressed about the state of the market before coming to Hamburg, he sees from the positive mood at the conference that life goes on. Dalbeler thinks that the industry is equipped to handle the current situation, and that there is no need to be pessimistic. Positive points discussed among the producers were the likelihood of more dramatic production cutbacks, and the combined efforts among the global market to unite and solve the problem. The main problems, Dalbeler said, are a lack of demand and a lack of confidence. However, the current crisis provides a chance for the world market to unite, and he is sure that the next meeting will be "even better than this one." SteelOrbis CEO Mr. Eryilmaz then concluded that he has learned from these committee meetings that there are definitely enough reasons to be optimistic about the market.