At the SteelOrbis Fall '10 Conference & 63rd IREPAS Meeting, long product and billet producers, traders and raw material suppliers convened in special committee meetings to share their views about the current situation in the markets.
The committee chairmen were as follows: chairman of the Raw Materials Committee - Ioannis Meimaroglu, chairman of the Traders' Committee - Wilhelm Alff; chairman of the Rebar and Wire Rod Committee - Mohammad Al Saadi, and chairman of the Billet Suppliers' Committee - Uğur Dalbeler
The Traders Committee came to the following conclusions: demand in the US and in the European Union is very weak, especially for rebar and wire rod; in Europe inventories are low and considering price volatility consumers prefer to purchase from local suppliers but in limited volumes; limited credit insurance availability increases risks for traders and reduces demand; the fast growing Latin American markets, particularly Brazil, create opportunities for traders provided governments in the region do not take measures to limit imports. Chairman of the traders committee Mr. Wilhelm Alff added that steel futures is a tool to hedge risks such as price volatility, but it still lacks liquidity.
Chairman of the Raw Materials Committee, Ioannis Meimaroglu, said that confirmed scrap exports this year will be at lower levels compared to 2008 and 2009 and at the same time the supply of scrap is expected to be less than demand. Given the question about what the scrap prices will be, Mr. Meimaroglu highlighted that scrap market prices need to be at the levels to allow suppliers to replace the scrap materials which they sell. He confirmed that replacement cost is the main issue for suppliers and pushing scrap prices further down would mean decreasing the scrap quantities available, as well as the mill inventories and capacity utilization.
Uğur Dalbeler, chairman of IREPAS and also chairman of the Billet Suppliers and Producers' committees said that Russia, Ukraine and Turkey are the main steel billet exporters, while Russian and Ukrainian billet exports have declined as their domestic markets have strengthened. On the other hand, Turkey increased its billet exports by more than 75 percent year on year in the first eight months of 2010, since its rebar exports decreased by almost 40-45 percent in the same period. Mr. Dalbeler stressed the significance of the weakness of the US dollar, which limits price increases. Dalbeler also said that the approaching winter will limit scrap availability. However, he said that the lack of activity can be seen as an indication of an imminent increase in activity, and thus the outlook is still positive. Mr. Dalbeler said that the committee agreed that a rise will be seen later. On the billet side, he said the conclusion of the committee is that no downward trend is expected despite the silence of the last three or four weeks. Business is expected to resume within a short period, the committee concluded.
The chairman of the Rebar and Wire Rod Producers' Committee, Mohammad Al Saadi, said that levels of production activity vary according to the region. While Europe is weak in this regard, Latin American market is more lively, while the most positive market seems to be the Middle East. In recent weeks scrap prices have dropped and iron ore prices are expected to decline in the fourth quarter. Saying that the market will acquire clearer shape as China returns from its holiday, Mr. Saadi noted that in the Middle East market billet prices have reached the levels of rebar prices and that this situation limits the operating rate of local producers. However, the outlook for the last quarter of this year remains positive, Mr. Saadi said as he summed up the sentiment of the committee.