Supply no longer seems to be an issue in the global long steel products market and demand will be the driving factor, according to IREPAS, the global association for longs exporters and producers, though demand will probably be rather slow for a while because prices are normalizing and delivery periods are becoming shorter. With the impact of the approach of the end of the year, demand in the main markets worldwide appears to be flat, while demand for long steel products is heavily dependent on China’s behavior, both domestically and internationally.
After the summer holidays, the EU rebar market seems quiet, while there are different factors in the market which make mills hesitate in setting their prices. On the one hand, stocks of domestic buyers are high and panic over shortages has vanished, and so mills are no longer able to just dictate prices. On the other hand, they are also struggling to find sufficient volumes of quality scrap at competitive prices, amid the worsening situation in the logistics sector and the strong surge in electricity costs. According to IREPAS, under these circumstances, the EU mills have to seek to pass on rising costs of €50-100/mt to their customers, while imports in the region are less of a threat.
Meanwhile, it seems that the competition in the market is becoming rather domestic amid high freight rates. However, due to the uncertainties and slow recovery of domestic demand, some of the EU mills intend to dump their extra quantities in the export markets.
As for the coming period, according to IREPAS, Asia and Europe are currently going through a severe energy crunch with all-time high prices for coal and natural gas. China seems to need to cover domestic outages by means of imports, and this has strengthened markets elsewhere. Scrap and steel bookings which were postponed have recovered quickly, and some nervousness over sufficient availability has crept in.
IREPAS said it expects that ferrous scrap, iron ore and coal prices will increase in the coming period, which will cause margins to shrink amid high energy costs and, as a result, some mills will have to implement shutdowns. However, all of this will have less impact if China starts to buy pig iron, hot briquetted iron and semi-finished products.
Meanwhile, world GDP is expected to grow in 2021 in comparison to 2020, while China’s decision to keep maximum production at last year’s level due to energy shortages will set the floor for prices at the current levels. These are expected to provide support for the long steel market.
Under these circumstances, the global long steel market can still be described as stable and the outlook for the next quarter is much more positive than it has been seen for some time.