At the general traders' meeting of the SteelOrbis Fall '10 Conference & 63rd IREPAS Meeting held in Madrid on October 3-5, Wilhelm Alff from Stemcor Europe A.G. said that traders agree that the US and European markets are still very quiet, that the capacity utilization levels of rebar and wire rod mills are low and the weak demand in these regions is being satisfied by low volume supplies from local producers. In Asia and Africa, activity is stronger, while in the GCC region, including Egypt and Iran, the market is still "patchy". Alff remarked that Turkish rebar and wire rod producers are operating at higher capacity compared to their peers.
Mr. Alff also noted that Iran's recent excessive billet purchases have led to a temporary increase in prices, but said that this buying activity is unsustainable, considering the high cost of imports due to import duties and the sanctions imposed by the US and the European Union.
Regarding the Chinese market, traders said that the effect of the country's capacity elimination is yet to be felt. Expecting an increase in steel prices following capacity cuts and energy rationing measures, the Chinese mills are keeping huge stocks
At the general traders' meeting, the speakers, including Bern Neuenkirchen from Coutinho & Ferrostal, Wilhelm Alff from Stemcor, Butch Zeederberg from Balli Middle East FZE, Michael Setterdahl from Nucor Trading SA, Bernd Grabow from Macsteel Trading AG and FD Baysal from Seba International, said that the main problems they are currently facing are tight credit availability, which has a reducing effect on demand, and the credit insurance issue, which increases risks and also limits the volume of trade. Mr. Baysal told the attendees that some US banks have lost their credibility in Europe during the global financial crisis.
The volatility of steel prices, which is continuing to prevail in the markets, on the one hand provides traders with opportunities, but on the other hand this volatility is unhealthy since it limits the predictability of the market, Mr. Baysal said.
Mr. Baysal also underlined the changing structure of the steel trade. Producers, he said, are more and more supplying directly to end-users. Coupled with weak demand and customers' preference for local supplies, competition among traders is heating up and trade volumes are being reduced.