The global market situation for the long products has improved over the past couple of weeks, owing to the gradual demand revival in China and some third countries. Moreover, international supply has tightened further, while the fact that most producers are offering a few months ahead has also contributed to the upward movement of prices, according to IREPAS, the global association of producers and exporters of long steel products.
Overall, demand-supply imbalances continue to affect business, in the EU in particular. Construction in the region remains squeezed as the market is short of steel. Moreover, cut and benders are under increased stress since they have to replace stocks at prices approximately €200-300/mt higher than their current sales prices. The number of alternatives is limited since most sources of imports are not competitive and quotas are already filled. According to IREPAS, compared to HRC, longs prices in the EU are completely out of line.
The US market has also been suffering from limited allocation, while demand is very strong. Local mills are operating with full order books, while imports are even harder to ship due to delays, still high costs, and extended lead times. Financial issues are another big problem since almost all customers have maxed out their credit limits and this has been happening in many markets, not only in America. Still, both the EU and the US have their protective measures in place and the situation is expected to continue for a while.
China has been a supportive factor recently with the increase seen in its local demand. Moreover, the recent abolition of the import tax has boosted the demand for square billet, providing support for international sellers worldwide. In addition, the cancellation of the tax rebates for longs means that China most probably will not be an active rebar exporter for a while, which can create stronger opportunities for alternative suppliers.
Latin America has been experiencing the same situation with tight supply versus increased demand. As a result, some of the regional countries have chosen to export less, while imports to the region have intensified. In the meantime, Turkey has remained an exception with its local demand being subdued due to financial issues and high interest rates.
Overall, the entire supply chain has been earning good profits and disrupted deliveries have been creating pockets of demand in different areas of the world. Stimulus programs have been also helping to increase demand. Vaccinations are also up and running in different parts of the world, giving hopes for an additional demand revival. As mentioned previously, credit insurance is becoming an issue for buyers as prices continue rising.
Competition in the market is characterized as healthy and demand is sufficient. IREPAS describes the outlook for the next quarter as a positive one.