The global long steel products market is still characterized by oversupply and insufficient demand, according to the short-range outlook issued by IREPAS, the global association of producers and exporters of long steel products. The coronavirus issue in China makes it difficult to predict the future of the Chinese market and China’s effect on the global market. It might cause a reduction in demand in China and surrounding regions, thus creating oversupply of steel in the world market, IREPAS suggests. Other major concerns of market players include the US presidential impeachment trial and the tensions in the Middle East.
Despite higher domestic production and imports from Section 232-exempt countries, steel prices are highest in the US, while prices in the EU are slowly recovering and margins for producers are improving. Also, the IREPAS report underlined that “it is a big positive to see Chinese steel exports under control”.
Although the EU market has made a very quiet start to the new year, 2020 is expected to be better, especially compared to the second half 2019. With the demand situation varying among EU countries, mills are trying to shift their shipments accordingly, which puts downward pressure on domestic mills’ prices. This situation is expected to improve in the coming weeks following movements in scrap prices, IREPAS noted.
In the raw materials segment, the IREPAS report pointed out that scrap prices are going down, putting more pressure on the Turkish long product market where the spread between scrap and rebar prices is at its lowest since January 2019. Meanwhile, as long product demand is still not showing any signs of recovery, margins remain low. On the other hand, iron ore prices are still high in relation to scrap and look like they will remain stable at around $80/mt CFR FO China main ports.
While regional competition is very high in most markets and could see a further increase in the second half, competition in global trade is slowing down due to trade actions.
According to IREPAS, although the current market situation is mostly unstable, the outlook is generally satisfactory with the exception of the American market where uncertainties contribute to an unsatisfactory environment.