IREPAS: Global long steel market currently depressed amid more difficult circumstances

Friday, 06 September 2019 16:28:13 (GMT+3)   |   Istanbul

The global long steel products market is depressed at the moment as circumstances are becoming more difficult, according to the short-range outlook issued by IREPAS, the global association of producers and exporters of long steel products. It has become a buyer’s market and is difficult to secure orders at reasonable prices. The problem lies more on the demand side rather than with supply, and, therefore, it might take longer for a balance to be reached.

Turkish capacity utilization below 50 percent puts pressure on scrap prices

Scrap prices became further depressed as Turkish capacity utilization went below 50 percent, according to the IREPAS report. Scrap inflows have started slowing down as an effect of rapid price adjustments and slowing industrial activity. Freight rates have been soaring during late August and early September. 

Positive expectations for fourth quarter postponed until first quarter next year

Under current circumstances, IREPAS pointed out that many steel producers have already started slowing down their operations, extending maintenance and idling facilities, while inventory levels also need to come down to see some stability. Accordingly, the association’s positive expectations for the fourth quarter have been postponed to the first quarter of next year.

Turkish exporters continue to struggle

Regarding Turkish exports, the IREPAS report said that, while exports will slow down inevitably due to the EU market being closed until next April, sales to the US are still considered to be risky amid difficulties in predicting the next move on the US side. Yemen, Israel and Singapore do not provide security and confidence for the long term.

Steel prices in EU fail to indicate anticipated increase, real improvement unlikely before 2020

Although steel prices EU were expected to pick up after the summer holidays, the recent downward trend of ferrous scrap and iron ore prices is putting a lot of pressure on the EU markets. IREPAS indicated that even producers of high carbon content wire rod have been trying to sell mesh-grade wire rods, which adds salt to the wound. As a result, prices have not increased despite good demand and it is difficult to expect real improvements until next year. IREPAS also said that production cuts in Europe have become more pronounced over the past month as industry and construction are not ramping up to the same extent as last year. 

Chinese exports remaining unchanged is one bright spot for the market

Chinese exports remaining at the same levels of last year is one bright spot for the market, as well the fact that the trade dispute escalation has not yet become a full-fledged trade war. 

Outlook is cloudy and unknown

IREPAS described the current status of the market as fluctuating and unstable, adding that scrap and iron ore prices are both expected to follow a weakening trend as there is no market improvement on the horizon and therefore the situation is unsatisfactory. “The outlook of the market is cloudy and unknown, while we wait for the next tweet,” IREPAS said in conclusion.

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