According to the latest report issued by IREPAS, the global association for longs exporters and producers, sentiment in the global long steel products market has remained subdued since, even though some expectations of a revival were seen earlier, they have failed to materialize in the main geographies due to weak demand, the low-to-negative margins of mills, and geopolitical uncertainties.
There has been no positive news coming from China during the traditional local restocking period ahead of the Lunar New Year holiday. Even despite the recent drop in iron ore and coking coal prices, long steel producers in China are still mainly working without positive margins, which reflects the still worse-than-expected demand conditions. Though some price rebound is still expected in the Chinese market just after the holiday, the overall outlook is still far from positive.
Also, demand for longs in the EU has been hit significantly by high interest rates, higher costs and the increase in bureaucracy due to environmental regulations, with rebar demand down 17 percent and wire rod consumption down 10 percent in total. Germany has been affected the worst. Despite the slowdown in demand, EU mills’ local prices have posted some slight increases on the back of production costs, which means interest in imports and shipments from North Africa and Turkey is expected to remain at firm to higher levels in month ahead.
The Turkish longs market will remain slow as exports will still be under pressure from the political dispute between Israel and Turkey, while domestic demand is unlikely to post significant improvements in February. The recently announced safeguard duty of $175/mt on wire rod imports in Turkey has led to a significant decline in trading and only some imports from certain countries and to certain buyers are possible.
Positive sentiments have been seen only in the US market recently. Demand in the US has not changed much, but, as interest rates are coming down, the mood is positive, in particular in residential construction. In addition, longs producers in the US are happy with prices and volumes in the export markets, in Canada and Mexico in particular.
Among the positive factors that could support the long steel market in the future is the possible reduction of interest rates by central banks in major economies. However, the positives may be offset by global challenges as there are two full-scale wars going on and the Red Sea interruptions have now added to the cost of shipping.
According to IREPAS, the global long steel market has a stable status with recession signals still observed, while the outlook has remained challenging, due to ongoing wars and with markets becoming more local, while demand has remained at reduced levels.