IREPAS, the global association of producers and exporters has issued a detailed press release on the current developments in the long steel products market. Among other things, it also discusses the global scrap market and its impact on steel production and prices.
Tight supply on the global market for long steel products, full impact of vaccines remains to be seen
Supply in the global market for long steel products is still tight, and this situation is unlikely to change until the second quarter. Chinese demand for raw materials and semi-finished products has given the markets the biggest boost. Depleted supply chains need to be replenished, and stronger production is planned. Order books have filled up nicely.
Purchasers complain about prices, but are willing to pay in the face of tight supply
Massive, unprecedented stimulus around the world has put pressure on the U.S. dollar, boosting commodities and assets. The market is out of balance: however, no one will complain about volumes, although consumers and purchasers will complain about prices. Nevertheless, they are still willing to pay to buy steel under the prevailing conditions of tight supply.
High spread between raw material and steel prices will spur higher production
The spread between rebar and wire rod prices is probably higher than ever before. We are also seeing the highest spread between raw material and steel product prices in years, which will certainly motivate steel producers to increase production.
Scrap markets likely to remain in focus in coming years
It seems that it’s all about scrap, which is likely to be a major focus in the coming years, which could lead more Chinese capital into the scrap business. The rapid increase in scrap prices and rising demand ahead of the holidays will keep everyone busy in the coming months.
China to accelerate steel industry’s shift to scrap-based production
The Chinese steel industry is looking to accelerate its shift to scrap-based production. Imported scrap could cool domestic scrap prices in China and also bring in higher-grade material that is hard to find domestically.
To date, Chinese domestic scrap has been priced significantly higher than scrap in international markets. The markets will likely balance out and the logical trade routes will return to how they looked a few years ago. Japanese and some U.S. West Coast scrap will be diverted to China instead of South Asia. Of course, Chinese mills will not import if scrap from overseas is more expensive than domestic material.
Scrap prices could be driven up by recent developments in Russia, China and the U.S.
EU and U.S. mills will likely have to find new strategies for when there is more competition for their domestic scrap. Will they force their governments to take action against scrap exports, as the Russians have done, which is clearly against WTO rules? Russia’s revision of the minimum tax on scrap exports, China’s lifting of scrap tariffs on imports, and the healthy local market in the U.S. could very well keep scrap prices up.
Revival of steel production in Europe and North and South America
While the world is reawakening, domestic steel production in Europe and the Americas is also much stronger. Stronger levels are expected in the next quarter. Industrial demand is also picking up.
Vaccines give hope for return to normality
As we all tire of the pandemic and the restrictions that keep us trapped in our homes, we are all eager to hit the streets and start spending before summer arrives. Hopefully, the vaccines will help us get back to normal. As we recover from the pandemic and begin to look at where new opportunities are, it will certainly boost the economy and employment numbers should rise.
Varying competition on the markets, unstable prices at a high level
Competition among suppliers on the markets has recently ranged from a reasonable level to almost non-existent. The current market situation can be described as stable. Volumes on the market are okay, but market prices are unstable at a high level.
Outlook satisfactory at least for the first quarter, unclear for the second quarter
The outlook for the next quarter is satisfactory, but the situation on the markets in the second quarter will depend on many factors that are not yet known.
Source: irepas.com
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