Longs producers globally have remained under pressure from slowing markets, insufficient demand, and quite intense competition with relatively new active exporters - from North Africa, the GCC and partly Asia.
High interest rates continue to weigh on the steel business in the US in terms of the demand coming from both commercial and residential construction. Moreover, it is expected that both the US and the EU will produce less steel in 2023 than last year. Currently, the domestic volumes of longs traded in the US decreased recently, while imports have remained in place due to competitive prices, particularly from Algeria, Egypt and Bulgaria.
In fact, Turkish mills, which have not been competitive in the American market for a while now, have trouble competing with their rivals from non-traditional supplying destinations in other markets as well. Particularly, North African suppliers are quite active in the Mediterranean region, taking some orders from Turkey, while GCC suppliers have also been aiming to sell to Lebanon, for example, as well as to maintain their presence in the Asian markets. Asian longs suppliers, namely, Malaysia, Vietnam, and Indonesia, have been less active in trade to the distant markets.
In addition, Russian steel mills have become less active in exports in recent months, owing to the better demand and price situation in their domestic market, while foreign customers have been pushing for sizeable discounts due to sanctions-related risks. In fact, the most recently adopted sanctions are to create more complications for importers from Russia, with the EU having the right to request input origins. All in all, once the EU halts or significantly decreases imports from Russia, Turkey may follow its lead, fearing possible consequences.
In the EU, the domestic market has gone quiet by August due to the holiday season, and both ordering from the market and pricing have remained low and flat. Overcapacity remains the key issue for this market, forcing mills fight over potential buyers, while imports have diminished recently. Another problem is that the private sector in the region is holding back investments, which has a toll on end-user longs demand.
In China, exporters are not quite aggressive in the export markets, which usually affects international steel prices globally quite strongly. The country’s iron ore-based production is operating at around 90 percent capacity, while its EAFs are running at under 50 percent.
Scrap demand globally has been lower, mainly due to the slowing down of production is several consuming regions. However, scrap availability has also been reduced, thus allowing suppliers to avoid large discounts and even to push for a rebound. The rebar price trend may also support the situation in the scrap segment, particularly if the projects announced in Turkey, Saudi Arabia and Europe kick in in the autumn.
International competition in the longs segment remains active, but is seen more between countries located close to each other. One reason is the uneven demand and price tends between the regions worldwide, another one is costly logistics.
Currently, IREPAS evaluates the longs market status as unstable and unpredictable for the next quarter, while the outlook for the ferrous scrap suppliers may be more positive.
