The world’s longs steel market remains a producer’s market since increasing lead times and shortages of material allow mills to increase prices and maintain them at high levels, according to IREPAS, the global association of producers and exporters of long steel products. Competition is mainly seen among buyers and not sellers, specifically on a regional level due to limited lead times.
The lack of steel allocation globally is considered to be a result of strong demand but also a consequence of production outside of China not having increased in the first two months of the current year. In particular, the outputs in the US, Japan, Russia, Germany, Taiwan and France were lower year on year. The increases recorded in India, South Korea, Turkey and Brazil seem not to have helped ease the supply situation amid the increased demand. In the meantime, China’s steel production recorded a rise of 13 percent in the given period, while Chinese domestic consumption is expected to remain at last year’s levels.
Shortages of many products still persist in the global market and, with the effect of logistical and shipping disruptions, they support price rises across the world. Buyers have been purchasing less than their needs, but the local shortages keep pushing prices up further. In particular, longs producers in the EU have no problems filling their order books, while the reduced number of offers and seasonally stronger demand have resulted in the steady uptrend of prices. The question regarding the possible termination of the safeguard on imports from July 1 remains open but, even if the decision is positive, no overflow of longs into the EU is expected, IREPAS noted.
The market is also positive in the US where mills have been operating at high capacity utilization rates, high margins, and the ability to take any business from imports at will. Such a situation has created problems for US importers who have trouble finding volumes since local mills are well booked and the availability is three to four months from now for flats and a minimum of two months for longs. Increased shipping costs and tight vessel availability contribute to the global price uptrend and importers find it even more difficult to make projections for future business. Moreover, it is hard to predict how long the trend in the shipping segment is going to last.
China, which is comfortable with local consumption and ongoing imports, seems not to be much interested in increasing exports, which means that other suppliers globally will not be disturbed for now. The new five-year plan promises good levels of spending on local projects. China’s timid export behavior, coupled with increasing vaccinations globally and the US infrastructure bill are considered by IREPAS to be the main positives for the second and the third quarters of the current year. The expectation is for prices to hold for the next three months and the following downtrend will be gradual rather than sudden.
IREPAS evaluates the global longs market as generally stable although there may be some fluctuations. The second quarter is expected to be more positive compared to the first one and the market outlook is very good and satisfactory.