On the last day of the SteelOrbis Spring 2022 Conference & 86th IREPAS Meeting held in Istanbul on May 29-31, F. D. Baysal from Seba International, chairman of the traders committee, said that regionalization, in other words protectionism, started with the Trump era in the US, followed by the EU decision to impose steel quotas. Later, this movement continued in a new dimension with Covid when producers realized that they should have inventories ready because of possible unforeseen interruptions, and also the supply chain issues which started with the pandemic escalated with ports being congested and many products arriving at the same time, he noted. “Ukraine was really a major addition to these problems and took the whole thing to another level, with EU manufacturers depending on Russian and Ukrainian supplies for their production. Globalization has taken a big hit and things will never be the same,” Mr. Baysal said.
Commenting on the effects of the war, the producers committee chairman said that initially in the first two months everybody panicked and that is why prices were jacked up, but later, especially after Russian steel products and billet started to reach markets that do not recognize the sanctions, the rise in prices eased. “I think sanctions will increase, but not before the year-end. Circumventing US measures is not possible as there are serious precautions, and it is the same for EU measures as well. However, payments are facilitated through intermediary countries like Switzerland and Dubai,” he stated. Baysal went on to say that unevenly applied sanctions create certain advantages for the countries which do not recognize the sanctions. “I don’t think there is an absolute winner, but countries that don’t recognize the sanctions have the upper hand, though for a short time,” he added. The Seba International official pointed out that it will take time for Ukrainian producers to come back to normal and then start producing, and when they do “after the war Ukraine will need more steel than any other country, so they will have to produce for their own consumption” rather than thinking about exports.
“Higher freight rates and congestion, especially in the US, is a significant factor in higher steel prices. Congestion will ease slowly. It may take six months to a year and freight rates really have to ease as well. Container prices have doubled, even quadrupled. It is not sustainable. Container lines deliberately pulled old containers out of circulation, causing shortages. Others will come in and produce containers. The situation will change soon. There will also be more ships being built and that will change the whole equation, but it will take time, so higher prices are here to stay,” he explained regarding freight costs.
Sharing his expectations for scrap prices, Baysal said that prices are probably at the bottom due to shipping and collection restrictions and the war, adding that prices will probably not go down much further.