Trade Resources Industry Views The Market Combines Areas Where Business Is Reasonably Good

The Market Combines Areas Where Business Is Reasonably Good

According to the short-range outlook report issued by IREPAS, the global association of producers and exporters of long steel products, the global long steel products market is still characterized by uncertainty amid the adverse effects of ongoing political tensions. The market combines areas where business is reasonably good, with some others where business is very weak.

Real demand slows down in EU

Real demand slowed down last month in the EU market due to the Easter holidays. However, the customers in the region who had postponed their purchasing decisions for a few weeks because of the consistent downward trend of prices during the first quarter of the year came back to the market as their inventories dropped below normal levels due to such delays in purchases, forcing them to place orders. In the meantime, the weakness of the US dollar makes imports to Europe more attractive.

The IREPAS report indicated that the US market situation improved for most products except for reinforcing bars, the prices of which were declining as there were too many import availabilities. The MENA and West African markets have continued to see good demand levels. There is strong competition between Chinese origin offers and some European mills to attract import orders.

Uncertainties prevail in long steel market

Uncertainties relating to the crisis in Ukraine have continued to create confusion, while, on the other hand, the downtrend in prices of both iron ore and scrap has continued to put pressure on demand for finished products, said IREPAS.

Competition is still at very high levels in the global long steel market and will remain so for a while, as the market may now be considered to be stable at a low level.

Meanwhile, world steel production has been setting records with the most recent March results up 1.4 percent month on month to an annualized rate of 1.664 billion metric tons, with China representing a significant part of the total increase amount as it produced at an annualized rate of 827 million metric tons. Whether China can domestically consume its steel production will remain an important but unanswered question for some time to come, just like the question of how China will address its pollution problems. IREPAS stated that another observation acknowledges increased consumption of raw materials commensurate with this record steel output. For example, apparent purchased scrap consumption in the world has been running at over 1 million metric tons per day so far this year, causing relatively high scrap prices despite estimated costs of blast furnace iron (BFI) being much lower due to reduced iron ore and coking coal prices. This may be more noteworthy given that conditions in reinforcing bar sales markets have been difficult, causing many EAF producers to run at reduced outputs. Any increased demand for construction steels may push scrap prices higher as many steelmakers may not be able to efficiently take advantage of lower BFI costs.

The IMF predicts global economic growth of 3.6 percent in 2014 and 3.9 percent in 2015. Worldsteel foresees that apparent global steel consumption in 2014 will increase by 3.1 percent to 1.527 billion metric tons, which is slower than the 3.6 percent growth recorded in 2013 but is the result of a projected decline in China from 6.1 percent last year to 3.0 percent this year. These two forecasts reinforce the belief that steel consumption is a function of population and affluence, IREPAS noted.

Slight improvement in second quarter

Business conditions in both steel and scrap are such that buyers are reluctant and/or unable to make longer-term plans but instead work hand-to-mouth with limited inventories to buffer any demand spike or supply disruption. Such low inventories as well as good demand in the Americas, Northern Europe, MENA and Africa may revitalize the market in the coming weeks. According to IREPAS, overall, the market is expected to improve marginally and to reach a satisfactory status in the second quarter.

Source: http://www.steelorbis.com/steel-news/latest-news/irepas-some-bright-spots-in-global-long-steel-demand-despite-ongoing-uncertainties-827406.htm
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IREPAS: Some Bright Spots in Global Long Steel Demand Despite Ongoing Uncertainties
Topics: Metallurgy