IREPAS Short-Range Outlook: Market looks good

Demand is picking up in the global long steel products market after the holidays and it will be even better once the weather becomes warmer in the northern hemisphere, as per the Short Range Outlook of the International Rebar Producers and Exporters Association (IREPAS). It seems the market is getting back to normal. Section 232 is practically over. General demand is strengthening with the pandemic possibly coming to an end. Bottlenecks seem to be easing somewhat, such as break-bulk freight rates, which have returned to normal levels. International trade has resumed, bringing confidence to the market. Covid restrictions are being removed. At some point, automakers' chip shortages will come to an end and this will boost car manufacturing.

Rebar-HRC spread returns to normal level
The spread between reinforcing bar and hot rolled steel coil prices is returning to the traditionally normal level of less than $100/tonne in mostly all regions, except USA and Canada.

Green initiatives
Global attention is shifting to steel producers announcing green initiatives, and the industry is now on a three to four-year road towards change, as per the Short Range Outlook.

Energy costs double
Energy is still the biggest issue being faced by producers and costs have double compared to the previous year with energy prices reaching record high levels. Costs of raw material will be another item to deal with. The geopolitical situation is also unstable.

Demand reasonable for EU mills
Demand is reasonable for EU mills as there are some major projects in the Mediterranean region. The extremely mild winter in Europe has not interrupted construction yet. All yards are running at 100% and mills are booked with orders. Building companies are still trying to push down cut-and-benders prices, but the resistance gives hope that bending prices will rise very shortly.

Almost every EU market is performing well, and imports are getting more regulated or are scarce. Buyers have almost no option. International demand is also either going up or is strong at least, despite the winter season.

US prices soften, contrary to global trends
However, the situation is very different in USA from that in the rest of the world. While the rest of the world is experiencing price increases, these are softening in USA. Though prices had been much higher in USA, the further easing of prices is confusing. Demand is still strong, but the fear of further price reductions keeps distributors from making future commitments.

After the EU, lifting of Section 232 measures from Japan may not help expectations. However, if the reduced quotas are also applied to Japan as was done in the case of the EU, the effect may be minimal. The US-EU agreement on the removal of tariffs has strengthened EU demand, though it has been slightly negative for US producers during the past month. However, there are expectations that prices will soon stabilize in USA followed by slow price increases due to the high inflation and low interest rates.

Turkish mills struggle to compete in Asia
The level of competition in the market is reasonable and mainly between Asian and Gulf countries as it seems Turkish mills have difficulty competing at the buying prices seen in Asia.

Outlook good for an overall strong market
The current status of the market can be described as very stable and strong, perhaps with the only exception of USA for the time being. The outlook is very good and satisfactory.