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According to a short-range outlook from the International Rebar Producers and Exporters Association (Irepas), the global long steel products market remains challenged by an unfavorable balance between supply and demand. The market’s primary concern revolves around the insufficient volume caused by slow consumption recovery from the pandemic’s impact.
The European Union (EU) has extended its safeguard measures for another year, signaling a continuation of the current protectionist trade structure that puts pressure on developing countries. Additionally, the EU’s Carbon Border Adjustment Mechanism (CBAM) is set to replace existing safeguard measures within 12 months, amplifying challenges for steel industries in non-EU nations. While direct and indirect subsidies and state aid support the profitability of the US and European steel sectors, other countries face unfair competition from certain Asian exports.
Demand in the US market has been slower than usual for the start of summer, despite a return to relative normalcy. The manufacturing Purchasing Managers’ Index (PMI) has contracted for seven consecutive months. Steel prices have softened due to weak demand and easing scrap prices. The banking crisis and high interest rates hamper new private construction projects, which have become more expensive and challenging to finance. Infrastructure projects progress slowly but rely on domestic mills with healthy profit margins. With slim margins, imports struggle to compete, except for neighboring countries exempt from Section 232 duties.
Competition in open markets remains fierce, with highly competitive Asian prices dominating the global market. China holds a dominant position, closely followed by some Middle Eastern countries. Meanwhile, there is a growing emphasis on reducing CO2 emissions worldwide.
Considering the aforementioned circumstances, the current condition of the market can be characterized as unstable. The outlook for the upcoming quarter is rather bleak, with elections taking place in various regions globally and the approaching summer holidays in Europe. These factors may lead to a period of stagnation and uncertainty, marked by fluctuations in both prices and demand within the international market. The downward trajectory of ferrous scrap prices in the US is expected to persist throughout July as steel producers prioritize volume over profit margins in their pursuit of stability, Irepas concluded.
