At the SteelOrbis Spring '09 Conference & 60th IREPAS Meeting, long product and billet producers, traders and raw material suppliers convened as committees to share their view about the current situation in the markets.
Committee chairmen: chairman of the Producers Committee - Uğur Dalbaler; chairman of the Traders Committee - F. D. Baysal; chairman of the Raw Materials Committee - Ionnis Meimaroglu; and chairman of the Rebar and Wire Rod Committee - Mohammad Al Saadi
Raw Materials Committee: From the point where we are now, it can be said that confidence in the markets is increasing. However, as scrap prices decrease, scrap supplies have become harder to reach. This situation causes difficulties for both suppliers and consumers. Under such conditions, we should meet not only at conferences but we should also remain in touch more effectively throughout the year. Communication in the markets is always essential, not just in periods of economic regression or during prosperous times.
Rebar and Wire Rod Committee: Given the situation shaped by the economic crisis, there is no doubt that demand has been badly affected. Although the impact has varied according to region, demand has decreased on average by about 30 percent to 50 percent. Sharp drops are observed, especially in Spain, Italy and Greece. Meanwhile, positive developments have been seen in the private sector in South Africa. In addition, demand is expected to improve in the near future in the Middle East. On the other hand, China and the Far East have their own characteristics, with vast production capacities in particular. The decrease in demand hit the producers, causing them to cut their outputs. Nevertheless, the current situation is more positive compared to Q4 2008. Moreover, it is now foreseen that 2009 will be a year of recovery, with 2010 predicted to be a year of uptrends. In the next two years we will witness recoveries in the various countries. Meanwhile, stabilization is indispensable for wire rod and rebar producers, with low iron ore prices being preferred so as not to drive finished long product prices higher and to narrow profit margins.
Producers Committee: Due to the economic crisis, the current situation resembles the market conditions of five year ago. Nevertheless, after all the developments seen since the last SteelOrbis and IREPAS conference held in Hamburg, we are looking hopefully towards the future. The production cuts in the various countries have shown the rapidity of our reaction. Given the actual conditions, the most reasonable way forward has been for producers to adjust their production according to demand and thus reduce their costs, so ensuring the continuation of operations. The common conclusion we reached at this conference is that we have to look at the future in a more optimistic way since we have now overcome the worst times. The sharpest price drop in history and the ‘economic winter' influenced the long products producers the most. However, the season has changed. Next year, we are expecting positive developments.
Traders Committee: The chairman of the Traders Committee said that they are cautiously optimistic about the future. He stated that the markets in the UAE are not as static as believed; however, since there is no new pipeline project, pipe exporters to the UAE may face difficulties in the future. Meanwhile, he added that other projects are on their way. Moreover, he said that fluctuations can be seen in the markets, but that the common worry is about overproduction. Outputs are still higher than they should be, and this may cause delays in price stabilization even after the markets recover. The chairman added that they are facing difficulties in obtaining credit from the banks, and said that they have suffered as the banks increased their margins. "Maybe it's time for every trader to change their sale terms and to leave open account sales," he said.
At the end of the committee meetings, SteelOrbis General Manager Murat Eryılmaz stated that, overall, the common view among committee participants was that the stabilization is vital and that the worst times have already been overcome.