Speaking at the Traders Committee during the SteelOrbis 2011 Spring Conference & 64th IREPAS Meeting held in Hong Kong on April 10-12, Nucor Trading SA managing director Michael Setterdahl said that there have been unexpected developments in the last six months, including the political changes in the Middle East and North Africa as well as the earthquake in Japan, which have psychologically affected the market in direct or indirect ways.
Mr. Setterdahl indicated that purchases are proceeding in the Far East in the face of the risk of scrap being radioactive, apart from the possibility of a temporary interruption of the scrap flow from Japan which exports 7 million mt of scrap annually. Moreover, Setterdahl stated that demand will go up due to the reconstruction work which will take place in the future in Japan, and that rebar consumption might increase and exports might decrease in the domestic market of Japan which is usually an exporter. In this context, there could be an increase in rebar and section prices in South Korea.
Speaking at the meeting, F. J. Elsner Trading GMBH managing director Dr. Siegfried Purrer said that the traditional low and high seasons as regards steel prices have now changed. Purrer also said that credit insurance problems have continued to exist since the economic crisis.
Butch Zeederberg of Balli Middle East FZE said that an important issue for traders nowadays is to decide which position to take in which product. Zeederberg added that, while Turkey had a rebar export volume to the UAE amounting to 4-5 million mt before the crisis, this decreased to 1 million mt as of last year and the role of Turkish producers in the region might change in time in line with the investments being made in steel production in the region.
Traders also stated that the importance and use of hedging and derivative tools in the steel market have gradually increased. Despite the increasing use of these tools which are helpful to manage risks and fluctuations, the traders said they believe the importance of the role of physical trade and traders will be maintained in the long term since there are risks that cannot be fully eliminated, such as the latest earthquake and tsunami disaster.
Traders also said they expected to see an increase in the scrap needs of China as a result of the investments made in electric arc furnaces in the country. As a result, Turkish producers could face increasing scrap prices in line with rising scrap flow from the East Coast of the US to China.
Pointing out that China's share in two of its main export markets, South Korea and India, will continue to decrease due to production investments in these countries, the traders committee also underscored the rapid growth in South America, particularly in Brazil.