According to the market outlook released by IREPAS, the global association of producers and exporters of long steel products, demand in the global long steel products market has not indicated the long-awaited increase yet, and is still at very low levels due to the long and cold winter in the northern hemisphere, especially in the EU. Steel mills are still taking action to achieve a balance between supply and demand in the market. However, the supply levels have not really been of much help lately in the already tough market circumstances.
The situation in the EU market has gotten worse as there are too many offers in the market and this has caused buyers to become even more reluctant to purchase. Elsewhere, the market situation does not show any improvement compared to one month ago.
According to IREPAS, there is an overhanging fear in the market that iron ore prices will move down even further and that the ferrous scrap market will have to undergo a downward adjustment also, in addition to the fear that the market situation in China will deteriorate.
On a positive note, steel producers are taking the necessary steps to overcome the oversupply situation globally, while consumption has increased in the US market. The weather conditions, particularly in Europe, are improving and hopefully will help bring better demand back to the market.
Competition levels are extremely high in the market, due to the production volumes witnessed in January and February, and due to the sudden change of mood in the Chinese domestic market. Protectionist measures are already in place or being studied in a few markets, increasing pressure and subsequently competition in other areas.
The association's outlook for April indicates that the market circumstances are already very tough, and the outlook does not look very bright in the short term, but production cuts are expected to help achieve a restoration of the balance between supply and demand. Moreover, demand should return to the market in the second quarter on the back of the improving weather conditions.