The threat of new trade measures in the US and of a counterreaction by the EU is weighing on all market players. The G20 summit will show how the US administration and President Trump will move forward - whether he will prefer to continue with confrontation and the blockage of imports or whether he will soften his stance and come to a mutual agreement, according to the short-range outlook report issued by IREPAS, the global association of producers and exporters of long steel products.
Will the US become ‘an island unto itself’?
According to IREPAS, the big philosophical question at the moment is whether the US shall become ‘an island unto itself’ or whether the reality of globalization pressures will reset the markets. If the US is to implement new trade measures as leaked out at the beginning of July, the shock wave in the market will be massive and unpredictable.
No major changes in global market in past month
Apart from increased concerns over possible trade measures, there have not been any major changes in the global long steel products market during the past month. The increase in the price trend has pushed customers to conclude purchases, contributing to a temporary rise in apparent demand.
Prolonged stability seen in scrap market
Regarding raw materials, the IREPAS report indicated that the scrap market has seen prolonged stability and remains firm due to strengthened demand in the light of continued lower steel exports from China. Industrial demand remains solid for the coming quarter, and this is feeding through the supply chain. Intra-European and US domestic orders are solid. However, the spread of iron ore prices and scrap prices does not make any sense in many regions of the world, the IREPAS report noted.
Demand for longs in Turkey and lack of competitive Chinese offers provide boost
The current level of demand for long products in the Turkish market and the ongoing absence of competitive Chinese offers are positive factors for the market.
Chances of imports to EU increased by weaker dollar versus euro
The weakening of the US dollar against the euro has obviously increased the chances of imports to the European market from US dollar-oriented regions.
Competition remains very strong in global longs market
Competition in the global long products market is still very strong as there are actually not so many options for suppliers under the current unstable and fluctuating market conditions.
Outlook remains firm for coming quarter
A lot of industries are talking about capacity limitations, which have not been seen in a long while. That said, the outlook for the next quarter remains firm as it is satisfactory for mills, though unpredictable for traders, the IREPAS report concluded.