The global steel export market is expected to shrink further amid spreading protectionism, according to the latest monthly report from IREPAS, the global association of producers and exporters of long steel products. The EU recently launched antidumping investigation on HRC imports from Turkey and Turkey retaliated with duties on steel products from the EU. Canada started a similar investigation against imports of heavy plates from several countries, while Egypt has been working on a 10 percent duty. Accordingly, IREPAS said the world market is shrinking further and Russian mills are taking the lead and dominating the market, which the association says will be a “real game of survival for a while” with cost of production as the key market factor.
As for global longs consumption, IREPAS said prices are moving up, particularly in Asia, but consumption forecasts remain uncertain. The optimism in the futures market support physical steel demand, however IREPAS worries about the supply and demand situation in the case of weakening of the support from the futures market. On the other hand, despite the impact of the Covid-19 pandemic the World Steel Association (worldsteel) still foresees an increase in steel demand in China in the current year, restricting the fall in global steel demand in 2020 to an anticipated drop of 6.4 percent, whereas demand in the rest of the world excluding China is foreseen to contract by 14.2 percent compared to 2019. Meanwhile, June and July are expected to be months of stabilization before a recovery later in the year.
Demand in the ferrous scrap market has recovered and the activity has been general with the raw material inventories having had to be rebuilt after the lockdowns, IREPAS said.
Stimulus packages around the world are also acting as fuel, IREPAS reports. Financial markets are seeking a V-shaped recovery, rather than a U- or L-shaped economic rebound.
As for China, which IREPAS says has acted as a powerhouse in the past month for commodities, industrial activity in the country returned to normal in May. The quick return of Chinese companies to the market and China becoming an importer have been very positive factors, IREPAS said.
In summary, IREPAS noted difficulties in talking about the existence of global market amid all the aforementioned conditions. IREPAS said there will be 100 percent self-sufficiency in Asia in the medium term, with exporters soon looking for “the next market” and amid the current situation, competition can come from anywhere at any time.
Overall, IREPAS said the current status of the market is clearly unstable, as markets are still assessing the damages from the Covid-19 pandemic and the future remains very much uncertain. But, IREPAS said, at least investors and industries are showing optimism.