Steel prices may soften a little but will not go down much further as increased electrodes costs are offsetting lower scrap prices, thereby maintaining EAF-based mills’ cost structure. This is according to Murat Cebecioglu, chairman of the International Rebar Exporters and Producers Association (Irepas).

The electrodes shortage is “… not a short-term problem,” Cebecioglu, also Irepas producers' committee chairman, said at the association’s bi-annual meeting this week. He expects the deficit to continue into the first half of 2019, meaning the possibility of reduced steel production.

Neverthless, Cebecioglu said at the meeting monitored by Kallanish that the outlook for the fourth quarter is good as long “… there is no surprise from China.” A solid supply-demand balance combined with low inventories give reason to believe price levels will be sustained up till Christmas.

Irepas raw materials suppliers committee chairman Jens Björkman, meanwhile, said the recent build-up of scrap supply has put pressure on pricing for the short term. Domestic prices of obsolete scrap in the EU, especially in Germany, however, are at record-high levels. The market will likely see high prices for prime scrap, he observed.

The scrap market situation is “… very encouraging” for the remainder of the year, considering that Turkey, a major scrap consumer, has increased its steel production to above 3 million tonnes/month, Björkman added.

Referring to US anti-dumping duties on Turkish rebar, Irepas traders committee chairman Michael Setterdahl said most traders believe nothing can replace Turkish suppliers in the US. This is because they are one of only two markets beside China that can ship 50,000t of rebar within two months. In the EU there is a rebar surplus of 1mt because of reduced EU-origin rebar imports by Algeria, which used to buy 2m t/y.

Setterdahl concluded by saying traders are also concerned about China re-entering the billet market, adding that it is a question of when, and not if, this happens.