The global long steel products market seems to be in equilibrium at present, with slightly higher freight rates, according to the short-range outlook report issued by IREPAS, the global association of producers and exporters of long steel products. World steel production is up by 6 percent, while this situation needs to be monitored. If this continues to be the case for another year or so, IREPAS said the market might experience disturbance in the supply-and-demand balance in certain areas.
International business seems better, but protectionism could cause rapid changes
Although international business seems to be better, the IREPAS report said things may change quickly amid the current protectionist environment. The EU has restricted import levels on 23 items compared to last year, which will push prices up, especially when remaining quotas are being used up.
Great new era for US domestic mills but potential downside risks lie ahead
In the US, due to lack of imports or higher additional duty on imports, domestic mills are enjoying a new era of higher prices. However, the effects have not trickled down completely to the consumer yet. The impact will soon be felt and will trigger a higher level of inflation and thus higher interest rates which may prohibit new investments.
Impressive growth rate in US, risks for importers
That said, the growth rate in the US is very high. The country reported a GDP growth rate of over 4 percent in Q2. US domestic mills are expected to continue to enjoy the ride provided by the Trump administration. On the other hand, importers carry a serious risk as the inflated prices may drop down beyond their margins at any time and for any reason, including investigation by the US Department of Commerce for unfair profiting.
News from China is good
China is consuming more of its own steel as the situation in its domestic market still seems to be very good and is expected to remain so. In addition, the winter season, when production cuts will be seen, is around the corner.
Competition generally reasonable though less effective in some markets due to trade barriers
Competition in the market is reasonable in general, IREPAS said. However, it can be considered as not being effective in certain markets due to trade barriers.
Uncertainty prevails in some markets
There is a certain degree of uncertainty as regards the market situation, which may be considered to be stable for certain markets, but which can described as fluctuating and or even explosive for other markets.
World trade under pressure from protectionism
The IREPAS report said the major reason for such uncertainty is the protectionism which apparently sees no limits nowadays, saying what happened in Canada with retroactive duties against reinforcing bar imports from Turkey is “unheard of.” The US is apparently preparing new trade cases and of course many other countries will follow the same path. This is counterproductive to all world trade.
Outlook ranges from close to satisfactory to very good
Notwithstanding all the above, IREPAS said the outlook for the global long steel products market ranges from close to satisfactory to very good for most markets.