stahlmarkt 09 | 2019

22 Steel International
Long steel market currently depressed,
says Irepas, players agree
Circumstances are becoming more difficult
The global long steel products market is depressed at the moment as circumstances are becoming more difficult.
It has become a buyer’s market and it is difficult to secure orders at reasonable prices.
It might take longer for a balance to be
reached, said Irepas, the International Rebar
Exporters and Producers Association in a
report published in September. By then,
steel prices had gone down, following the
recent tendency of raw material prices. Iron
ore prices dropped by 25% within 30 days
and coking coal prices were down 10%.
Iron ore collapsed from a high of USD 120/t
at the end of July to levels of around USD
85/t.
Sharp drops in raw material prices
allow prices of under USD 400/t
The cost of steel production at BOF mills had
come down to around or under the USD
240/mt level and the spread for semi-finished
steel to around USD 150/t. It is difficult
to increase steel prices because there is
insufficient growth in demand for steel and
the new base prices for iron ore and coking
coal allow some companies to run prices
below USD 400/t without incurring losses,
Irepas said.
Ferrous scrap prices have trended down
throughout the late summer and became
further depressed as Turkish capacity utilization
dipped below 50%. Scrap inflows have
begun to slow down as an effect of rapid
price adjustments and slowing industrial
activity. Freight rates have been soaring
during late August and early September. Production
cuts have become more pronounced
in late summer as industry and construction
in Europe is not ramping up to the same
extent as last year, Irepas noted.
Positive expectations for fourth quarter
postponed until first quarter next year
Steel ingots
Under such circumstances, many steel producers
started slowing down their operations,
extending maintenance and idling
facilities. However, inventory levels would
also need to come down in order to see
some stability. Accordingly, Irepas postponed
its positive expectations for the fourth quarter
to the first quarter of next year. While
global business has deteriorated, business in
the USA is stable. Domestic mills in the USA,
which are still enjoying a 25 % safety margin,
are adjusting their prices to keep them
on par with possible imports, thereby
making the import business very marginal at
best.
Meanwhile, the EU market will be entirely
closed to Turkish exports until next April
which means that exports from Turkey will
inevitably slow down. Turkish exports to the
US market have resumed for just a couple of
players but sales are still deemed risky due
to the difficulties in predicting the next move
on the US side. The top three markets for
Turkish rebar exports have been Yemen, Israel
and Singapore, which do not provide
security and confidence for the long term.
Steel prices in EU fail: real
improvement unlikely before 2020
With the quota allowed for imports exhausted
and given the lack of a significant
threat to EU mills from other third countries,
EU prices should have increased after
the summer holidays. But the downward
trend of ferrous scrap and iron ore prices
put a lot of pressure on the EU markets.
Even producers of high carbon content
wire rod have been trying to sell mesh-grade
wire rods, which adds salt to the
wound, Irepas noted. As a result, prices
have not moved up despite good demand.
It is difficult to expect real improvements
until next year.
The current status of the market can be
described as fluctuating and unstable, Irepas
finds. There is no market improvement on
the horizon and therefore the situation is
unsatisfactory. At the time, Irepas issued its
statement in September, the prices paid by
stockholders to mills for rebar north of the
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steel market 01.2019