The global long products market is marked by oversupply, due largely to slowing consumption coupled with an increase in steel production in China, and this is not expected to change in the short-term, the International Rebar Producers and Exporters Association (Irepas) says in its September outlook.

Competition in the longs market remains intense owing to pressure from competitively priced Chinese supply, the association tells Kallanish. At the same time, the difference in costs between scrap-based and iron ore-based steelmaking, as well as cheap transport costs, are causing other imbalances in the market. Geopolitical conflict has also disrupted trading of billet and rebar in the Black Sea Region, Iraq and Libya.

“The current market circumstances are very challenging, and any change will depend strongly on the situation between Ukraine and Russia, and to a lesser extent on Iraq,” Irepas observes. “The price and volume of Chinese steel exports will also influence the market pricing for both steel products and ferrous scrap.”

The vast cost disparity between iron ore and scrap is causing scrap buyers to be cautious. Scrap prices may ease due to the influence of falling iron ore prices and downward pressure from the euro/US dollar exchange rate, but any significant scrap price reduction may also reduce collection activity, warns Irepas.

Resumption of demand for longs in North America – where the US is “driving consumption” – and northern Europe has been “reasonable” following the summer holiday period, but certain South American markets are witnessing a slowdown in activity. Overall, the supply-demand imbalance seems to have eased, particularly for semi-finished products, as a result of some production cuts.

Referring to the US Department of Commerce (DOC) dumping investigation against Turkey-origin rebar imports, which was concluded on 9 September (see related article), the association says: “Protectionist actions may become more widespread, which would definitely put pressure on prices in the international market and on margins.”