As the end of the year and the holiday period are drawing nearer, the situation in the global long steel market is far from positive, while the market outlook is impacted by many uncertainties, according to IREPAS. Demand in most regions remains low, while rising costs are aggravating the positions of many mills, making daily business difficult. The supply-demand balance has not improved at all since consumption has continued to weaken and not many factors support expectations of a demand revival.
In the EU, scrap supply has been a bit tighter than usual, which some market sources link with the approach of CBAM and related uncertainties. High prices for raw materials, coupled with increased energy tariffs, have pushed cost levels to new highs, while the overall volume of finished steel demand has remained relatively unchanged. The whole cost structure in the EU has been changing and the market is now even more cost-driven than last month. Some temporary relief may be brought by the adjustments of safeguard regulations in Europe, which will limit imports even more. Coupled with CBAM, the adjustments may bring more orders to local producers, but general end-user demand has not much potential for an increase for now.
In the January-October period this year, Chinese crude steel production decreased by almost four percent year on year to 817.87 million mt, which is considered to be a meaningful drop and, in theory, it should have reduced some of the pressure from oversupply in the global market. In reality, China has continued its sizeable exports taking into account its unstable domestic consumption. As a result, steel exports remain attractive for the Chinese and the situation is not about to change dramatically.
In the US, demand has stabilized in the past month, partly owing to a serious limitation of imports. Most stockists are trying to minimize their inventories before the year-end reviews. The pace of the investment in the country is quite slow, which affects the generation of new demand, since interest rates are high and a lot of commercial projects have been put on hold. While the 50 percent tax is still in effect for steel imports in the US, many countries still hope to negotiate and gain exemptions, particularly Mexico. Similar hopes exist in the EU with its new safeguard adjustments announced.
The somewhat unexpected uptrend in import scrap prices in Turkey is foreseen to impact capacity utilization rates in the country, but a lot will depend on the impact of CBAM implementation. During most of November, Turkey had been seeing rather decent demand for local rebar and prices were rising correspondingly, pushing up export indications, which, however, were mostly unworkable.
Overall, the longs market prospects for the coming months are characterized by great uncertainty, mainly linked to CBAM and the expected US Supreme Court ruling on the legality of Trump’s tariffs. These two factors, combined with the more regular market variables, make planning in the steel business extremely difficult for market players. Meanwhile, competition on the supply side remains tough, while demand volumes are low. Under these circumstances, the current situation in the global long steel market can be described as very unstable.
