The global long steel market has been experiencing a certain slowdown in demand, with the main markets approaching the holiday period which will last for a while. Accordingly, consumption and business activity have been weakening, thus naturally putting some pressure on steel prices. However, the discounts expected to be provided in the short run will still be limited due to production costs remaining high, according to the latest report issued by IREPAS, the global association for longs exporters and producers. In particular, no sharp price drops are expected up to the end of the year, given increased energy costs and still high prices for electrodes and refractories. The challenging situation in the freight market is seen as another supporting factor for steel prices. However, in recent weeks there have been concerns raised over the Omicron virus variant which may result in new lockdowns and restrictions and certain impacts on business.
Seasonal factors are predominantly slowing down the EU market, but many buyers covered their basic needs in late November and are not under pressure now. Basically, European producers consider business to be closed for the year and the market expects some of them to carry out maintenance works. Lately, imports have not been threatening the positions of the EU-based producers as quotas are full and are generally not large, while some export opportunities may exist following the Section 232 agreement with the US on quotas. In terms of the scrap segment in the EU, logistics remain a problem in some areas due to the winter conditions. However, scrap demand is expected to remain good up to the end of the year.
A lot of concerns exist in Turkey, which has been experiencing a sharp fall in the value of the lira against the US dollar, with the currency losing value very rapidly, thus naturally impacting business. Importers have become less willing to purchase and prefer to cover only urgent and necessary needs, while the overall local trade has also slowed down due to difficulties in the construction segment and risks for steel market players.
Following a rather long period of time, when trade was under pressure from long lead times, lead times are now becoming shorter, thus removing some of the uncertainty in the market. Balanced demand and supply should prevent strong volatility in the market and also mills have enough orders for the next couple of months, and so in the short run there is no need for them to be aggressive. The competition has become stronger globally as the number of the buying destinations is still limited and insufficient for everyone, but it might become even tighter once Russia resumes exports after its export tax is lifted, SteelOrbis estimates.
IREPAS’ outlook for the first quarter of 2022 is generally seen as stable despite some fluctuations that may be seen in certain areas. Currently, the market is considered to be mainly volume-driven and particularly the supply pressure versus demand globally is not expected to have a dramatic effect.