The outlook for the global long steel products market remains positive, according to IREPAS, the global association of longs producers and exporters, although headwinds such as higher logistical costs and delivery delays are making business difficult. IREPAS noted that exporters are under pressure due to increased freight costs, especially container shipments, and the only steel moving long distances seems to be Turkish steel and Asian flat rolled and coated products.
Strong demand remains the major supporting factor among long product markets, with regions and countries including Europe, the US, Canada, the UK and Israel among those boasting mills that have sold out far into the future, IREPAS said. In light of strong demand caused by economies rebounding, influential stimulus packages, and logistic disruptions, steel supply is catching up at a slower pace. IREPAS expects supply shortages to continue through the Western world, particularly in the US, a situation which could continue until the end of this year.
Other issues impacting global steel prices is the extension of EU safeguard measures and the addition to the export tax on Russian goods. Russia’s 15 percent export tariff could add further supply restrictions to the international market, although the full impact remains to be seen. IREPAS noted that most Russian mills are booked out for the next couple of months, and because they are in no rush to sell, Russian mills are keeping prices relatively steady, possibly by absorbing all of the new export duty.
As for global steel production, output increased by 15 percent in the January-April period of 2021, which IREPAS noted could put pressure on prices. China remains in a positive sentiment after its ruling party celebrated its 100th anniversary on July 1, while some other regions are struggling. Turkey is currently facing high interest rates and inflation, putting pressure on rebar demand. Although IREPAS notes that Turkey’s export volumes in the first half of 2021 were up by 16 percent, domestic producers would reportedly be more comfortable with higher numbers.
Elsewhere, European demand for long products remains very strong and prices are at record-high levels. IREPAS noted that while the unchanged extension of the EU safeguard measures for another three years was unexpected, Europe appears to be following the example of the US, which has left its Section 232 tariffs in place. While the EU could change its tariff policy once the US revokes Section 232, for now higher prices remain problematic for the industry, as availability of steel products remains unreliable, and strong demand is met with supply problems and rapidly-filled quotas.
As for scrap, rising freight rates for all forms of transport has made it difficult to ship ferrous scrap for long distances, and strong intra-European demand for scrap and steel along with historically high scrap-to-steel spreads has made trading much more regional than before. Freight prices have also driven up the price of shredded scrap compared to HMS in international markets, and IREPAS noted that high demand levels for scrap could continue into Q3.
Iron ore prices are also continuing to trend at high levels, with a current trading range of $210-$225/mt, and IREPAS said ferrous obsolete scrap is abundant. Strong spreads over obsolete scrap continue, with unprecedented spreads between shredded scrap and HRC prices. New production material and shredded scrap remains in high demand in the US and Europe, although spreads between scrap and long product prices are not as extensive—but still twice as high as in a normal market.
IREPAS noted that the current competition for supply is between consumers, not producers. “The good times continue for steel producers,” IREPAS said, “while consumers continue to sit at the table and eat whatever is served to them.”
Overall, IREPAS said it sees the market as stable with a very satisfactory outlook, and positive market sentiment should continue into the next year.