According to the latest report issued by IREPAS, the global association for longs exporters and producers, the balance between supply and demand in the global longs steel market is precarious.
China continues to be in the leading position, lowering billet prices and dominating both the longs and flats segments. In the meantime, the country does not seem motivated to reduce exports nor production, potentially harming the global steel industry in one or two years’ time.
Low capacity utilization rates and excess of stocks in China force BOF-based producers to lower raw material prices, specifically coke and iron ore prices, also causing finished steel product prices to drop. This weakness in Asia, and especially in China, is spreading to the entire world.
On the other hand, scrap is becoming more and more expensive because of the market tightness. As a result, since their costs are much higher, EAF-based steelmakers are struggling to compete with BOFs, and, unless China introduces measures that can change this scenario, the future of the market remains uncertain.
Moreover, demand in Europe remains mostly insignificant and there are no signs of an improvement. Turkish exports are up by 15 percent year on year, but they are still down 20 percent compared to the previous year and compared to the previous usual average export volumes (6 to 7 million mt per year).
The US market is rather still because of the summer holidays and the Fourth of July festivities, but infrastructure projects are continuing at a normal pace. On the contrary, commercial and residential constructions are a little slow, and longs and flats prices are under pressure mostly because of domestic competition. In spite of that, margins for US domestic mills are still healthy.
Global competition is tight, stable and at high levels, with China leading as anticipated. In these conditions, the outlook cannot be bright: the market, in fact, appears volatile and changing.