According to the short-range outlook report issued by IREPAS, the global association of producers and exporters of long steel products, there is obvious confusion and uncertainty in the global long steel products market triggered by the announcement of new tariffs on steel imports by President Trump as a result of the Section 232 investigation in the US, the subsequent exemptions from these tariffs, and the resulting safeguard investigation announced in the EU. Major exporters to the US - Canada, Mexico, Brazil, South Korea and Europe - have all been temporarily exempted from the recently introduced universal import tariff, and so the precise impact on international trade remains unknown.
The reaction of the EU to the measures brought in by the Trump administration and the expiration or otherwise of the exemptions from the 25 percent duty in the US on exports from the EU and the other countries mentioned can substantially change the flows of long steel products among the different markets. Under these circumstances, it has become extremely difficult to make business decisions, the IREPAS report noted.
Stronger demand and higher prices in US, but situation is volatile
Demand in the US market is actually stronger than before and supply to the US is now limited due to the Section 232 duties on certain countries. IREPAS said that prices are up, but the current circumstances have created further volatility where nothing is permanent and all is temporary. On the other hand China still remains out of the global long products market for the time being and this combined with strong demand everywhere is a positive factor.
All other regions performing more strongly, global demand remains elevated
According to IREPAS, with lower steel volumes exported, all other regions are performing more strongly. Solid production in the European and US domestic markets is expected during the spring months. Global demand for steel products and ferrous scrap remains elevated.
Low-to-medium competition in international market
The international market is characterized by low-to-medium competition. However, this may change with a potential trade war between the US, the EU and China. There exists obvious uncertainty together with stability issues, and price fluctuations are being observed in some regions.
Very high likelihood of ending up with more safeguard measures, as back in 2002
The IREPAS report indicated the likelihood of ending up with more safeguard measures as happened back in 2002 is very high, adding that the EU will probably apply quotas instead of tariffs, meaning that both the US and the EU prefer to have control over imports rather than simply blocking imports.
Outlook appears satisfactory for next quarter, but changes may happen
The outlook for the next quarter is satisfactory as of the current moment, although with the month of Ramadan in May and June, the US election season starting on July 4 could change all that, while a lot can change again on May 1 for the US, the IREPAS report concluded.