IREPAS: Tight supply drives global long steel prices higher

Monday, 11 January 2021 17:18:57 (GMT+3)   |   Istanbul

Short supply of material in addition to the roll-out of Covid-19 vaccines are among the main factors influencing the development of the global long steel market, according to IREPAS, the global association of producers and exporters of long steel products. Accordingly, expecting increasingly strong production against the backdrop of the release of vaccine programs, steel market insiders worldwide have started to replenish their depleted stocks. Moreover, taking into account the reduced supply worldwide as a consequence of the pandemic, customers have been forced to accept even higher prices. China with its demand for raw materials and semi-finished products has continued to provide the main boost to the market. Meanwhile, unprecedented stimulus measures across the world have exerted the pressure on the US dollar, additionally boosting commodities and assets.

Following the recent developments in China, Russia and US, global scrap prices are expected to keep firming up even further. Accordingly, while domestic demand in the EU and the US has started to recover gradually, China has cancelled scrap import duties and Russia has revised its minimum tax on scrap exports, which may consequently lead to a further decrease in supply and higher prices. At the same time, with China’s lifting of its import scrap duties, the global markets are likely to balance out, with trade routes returning to how they looked previously. Ex-Japan and ex-US West Coast scrap are expected to be redirected to China instead of South Asia. As a result, domestic scrap prices in China may move down.  

While the general outlook for the next quarter is relatively satisfactory, the prospects for the second quarter remain unclear as they remain dependent on a variety of factors which are as yet unknown. The report also included the following near-term expectations: "Prices may drop down any time for any good reason and developments after the Chinese New Year may be important. The fact that the incoming US administration is planning to put more funds into infrastructure is positive, but the effects of such action may only be observed from the second half of 2021."

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