At the second session of the SteelOrbis 2021 Fall Conference & 85th IREPAS Meeting held virtually on October 18, F. D. Baysal from Seba International, co-chairman of the traders committee, answered questions during a panel discussion.
Mr. Baysal said he believed that there is definitely a genuine recovery. He pointed out that steel production slowed down just to adjust to demand, not because the mills were not able to maintain production, but because most mills are run in an automated manner and are capable of working with minimum staff.
Commenting on the outlook for EU imports, the traders committee chairman said that demand for imports in the EU has been strong for some time and will continue, though imports face other limitations: for example, specifically for rebar, homologation and quotas are the limiting factors. “The Turkish rebar quota opening on October 1 got consumed in a single day, with many importers still holding back significant volumes to clear customs as of January 1. Also, significant imports from other developing countries are not realistic, as it takes time to qualify due to homologation procedures which can take up to 15 months,” Mr. Baysal said.
Regarding the recent surges in energy costs worldwide, he pointed out that energy price increases may be permanent, but that the surge seen recently is definitely temporary. He said that in 2008 and 2014 energy prices were even higher than today, but in subsequent years they moved down and even collapsed during the pandemic, resulting in many postponed drillings, production halts, and shutdowns of coal plants. “Going forward, all it takes is for Russia, Saudi Arabia and the US to increase production, and pricing will go back to normal levels again. Obviously, the nations who are importing their energy will be affected the most,” he suggested. He also commented on the situation regarding freight rates and said that the current levels are not a new normal, but they will not go down in the next few months either.
Addressing the issue of the trade talks between the EU and the US, Mr. Baysal said he believed that nothing has changed regarding US trade policy, but things are rather getting worse or staying the same, instead of getting better.
During a discussion on whether China would return to the export markets or otherwise, the traders committee chairman shared with the conference participants a rumored report that the Chinese government is mulling an export tax on steel starting from January 1 next year.
Finally, Baysal commented on current steel price levels and on whether they are here to stay: “Yes, prices will not decrease any time soon, at least not until the second quarter of 2022. Scrap prices decreased a little last month, but shipping prices continued to double or even triple, keeping steel prices at the same levels. High energy costs will continue to negatively affect steel prices. If China continues to decrease production and stay away from the export market, high steel prices may continue for a long while yet. However, in the long run, I think neither shipping prices nor raw material prices will stay this high.”