The global long steel products market has deteriorated slightly, with demand remaining stable but weak over the past few months, according to the latest IREPAS report. Rebar prices have shown volatility due to fluctuations in scrap prices, while higher scrap costs have supported demand for steel billets from the Far East. Infrastructure investments linked to AI data centres and growing electricity requirements could provide some support to steel demand.
Chinese oversupply remains a major concern
Excess production capacity continues to be a key challenge. Although the Chinese government appears willing to control supply, uncertainty remains over whether effective measures will be implemented. So far, there are no signs of a meaningful recovery in Chinese steel demand or a slowdown in exports.
IREPAS noted that uncertainty remains the main risk facing market participants, while high interest rates in Western economies continue to weigh on demand expectations.
European producers struggle with surging energy costs
IREPAS stated that European steel producers continue to face weak demand, intense competition and rapidly increasing production costs. Reduced import quotas and CBAM have so far provided limited support to prices.
Natural gas prices in the EU have increased by approximately 150 percent over the past three months, with Dutch TTF futures exceeding €100/MWh. Rising electricity and natural gas prices since August have added more than €110/mt to direct steelmaking and rolling costs.
As a result, producers face growing pressure to raise prices, accept lower margins or reduce output. The report noted that recent price increases have been driven primarily by higher costs rather than stronger demand. Further price increases are expected in the first quarter of 2027 if energy costs remain elevated, particularly if production is reduced.
US demand stable, while Asian markets show resilience
In the US, steel demand remains relatively stable, although high import tariffs and trade restrictions have limited opportunities for international suppliers. Growth is concentrated in AI data centres, energy and selected infrastructure projects, while residential and commercial construction remain weak.
IREPAS noted that North American capacity utilization remains around 80 percent, but increasing domestic competition could create oversupply concerns over the next two to three years.
Meanwhile, India and parts of Southeast Asia remain relatively strong markets, with some gradual improvement expected in Southeast Asia during 2027. Rising electricity costs and infrastructure constraints are also increasing production costs for electric arc furnace-based producers, potentially benefiting integrated mills.
Market outlook remains challenging amid tighter scrap supply
Global competition remains intense as excess capacity, particularly in Asia, and trade barriers force exporters to compete for fewer available markets.
According to the IREPAS report, demand is expected to remain stable but unsatisfactory in the coming quarter. However, higher energy costs and tightening scrap availability could push steel prices upward. Increasing domestic scrap consumption in the US and Europe is expected to reduce export availability, supporting higher international scrap prices.
