At the second session of the SteelOrbis 2020 Fall Conference & 83rd IREPAS Meeting held virtually on September 21, Wilhelm Alff from Duferco and F.D. Baysal from Seba International, members of the traders committee, informed the participants about the market developments during the last six months. Mr. Baysal said that market conditions in the US are stable, improving from the big shock, while capacity utilization rates are still way behind 2019 levels. He pointed out that compared to early September last year, the capacity utilization rate is still 15 percentage points lower. Regarding the construction sector, the committee member said that the residential segment showed improvement, however the non-residential segment is still down with little prospect to recover. He also said that in September, prices finally saw an increase in all categories.
Mr. Baysal said that there will not be many changes regarding trade measures depending on US election results. He believes if Trump wins, US will continue filing maximum numbers of AD and CVD investigations until no competition is left and Section 232 will continue, and while Biden might be more sympathetic to free trade, Section 232 will still remain in force in case Biden wins.
Mr. Baysal said that for non-residential construction in the US, there will be some fundamental changes and some are already in progress. For example, as people are working from home and companies will occupy less office space, he expects a major stagnation in this market. The committee member also expects less demand for commercial buildings.
For Central and South America, Mr. Baysal said that these countries are on the verge of slow improvement in both demand and supply. Some countries such as Mexico and Brazil were hit hard by the pandemic, however both of these countries including Argentina are exempt from Section 232, therefore their supply will increase with demand coming from the US, however he does not see big improvement in terms of local demand in 2020.
Commenting on Europe, Wilhelm Alff said that in Germany construction continued uninterruptedly, with demand for steel being even higher than normal, as many construction sites speeded up projects worrying that they might have to shut down altogether. On the other hand, in countries such as Spain, France, Italy and Poland, demand decreased as trade flows were interrupted and consumption decreased by 10-25 percent in these areas. Mr. Alff said after declining at the beginning of the pandemic, scrap prices increased by $90 up to now because of the regional interruption of trade flows. Meanwhile, rebar prices in the EU increased by €60 compared to beginning of the pandemic.
Regarding EU quotas, Mr. Alff gave some background information on the changes in EU safeguard measures, indicating that the quarterly allocation which came into force as of July 1 is an advantage, because this way, market is not flooded with all the material arriving at the same time. He said that the safeguard measures already lead to a drastic reduction of imports, pointing out that in 2019 steel imports into the EU stood at 1.8 million mt, while in the first half of the current year, total steel imports were less than 400,000 mt.