IREPAS: Prospects for longs market positive; energy costs, freight and protectionism still major issues

Monday, 08 November 2021 17:36:16 (GMT+3)   |   Istanbul

Supply and demand in the global longs market have ultimately balanced out, with the major regional producers returning to almost normal lead times, according to IREPAS, the global association for longs exporters and producers. However, high energy costs and logistical challenges may weigh on the business environment further and thereby contribute to the mounting uncertainties among market insiders. Despite the continued decrease in imports by China, demand in Europe and North America is expected to remain solid. 

The agreement achieved recently between the US and the EU may open opportunities for EU-based rebar and wire rod suppliers as regards supply to the US market. Taking into account the current high prices in the EU and high capacity utilization, the EU-based mills are not expected to be aggressive in their offerings. Moreover, exorbitant freight costs and a limited quantity for export (3.3 million mt) may keep prices high. 

Although demand is expected to remain strong in 2022 with investment popping up worldwide, congestion in shipments and high freight costs remain the main negative factor, reducing the margins of global longs suppliers. 

As the EU and the US have followed China as regards focusing on the reduction of environmental impacts, this will certainly increase the cost of steel production and will add more limitations for traders. Consequently, competition in the global long products market appears to be lower. 

On balance, the outlook for the global long steel market for the next quarter is stable, with additional support being expected from the reduced supply. Specifically, there are a lot of maintenance works scheduled for November and December. In 2022, certain new capacity projects are expected to be implemented, but the impact on the global steel market will be seen later. 

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