The global long steel products market has shown no signs of improvement, with the business environment deteriorating due to a worsening supply-demand balance. According to the latest report issued by IREPAS, the global association for longs exporters and producers, the wars in Iran and Ukraine have significantly exacerbated global supply chain disruptions, while current price increases are being driven by a supply-side shock - characterized by higher energy, electricity, and freight costs - rather than by a recovery in demand.
Ceasefire critical to avoiding recession
IREPAS stated that much of the market's future depends on whether the recently announced ceasefire in the Iran war holds, adding that, if the ceasefire fails and energy prices remain elevated, many economies could enter recessionary territory. While higher costs have been accepted by customers as inevitable so far, the association indicated that rising protectionism and uncertainty regarding future demand are further complicating international trade.
Diverging scrap and regional dynamics
Regarding raw materials, it was pointed out that US ferrous scrap export volumes are declining due to higher domestic consumption, while the UK is shifting toward containerized scrap exports to Turkey. On a regional level, IREPAS identified three distinct dynamics: competition in the US remains largely domestic, the EU market sees a mix of domestic rivalry and limited imports, while the rest of the world faces intense global competition.
Short-term support from restocking
On a more positive note, the association observed increased pre-ordering and restocking activity. Contractors are securing supplies in advance to mitigate the risk of further cost escalations. It was reported that, in the current inflationary environment, businesses are building up inventories as a precautionary measure, providing some short-term support to market demand.
Fragile outlook for the next quarter
The outlook for the coming quarter remains uncertain and heavily dependent on geopolitical developments. The market remains highly unstable and sensitive to US policy decisions regarding the conflict. If the ceasefire holds, IREPAS expects gradual stabilization and improved demand; however, a breakdown of the peace process would likely trigger a significant economic slowdown, affecting all industrial sectors except the military-industrial complex.