Some improvements in stable but quiet market

The global long steel products market is generally stable but still quiet, though some movements have started to be observed as we approach the end of the year due to several different factors.

First of all, a seasonal uptrend in ferrous scrap prices has been triggered as the winter approaches and supply is expected to be tightened. This same situation also exerts an impact on long steel product prices as raw material costs and subsequently production costs will be affected.

Secondly, the antidumping investigation on reinforcing bar imports from Mexico and Turkey has changed the supply and demand balance in the US market as many major players are out of the market now. As a result, US domestic reinforcing bar prices have started to climb.

Moreover, a better demand scenario for long steel products is observed in certain markets like the Americas, the GCC and the EU.

The EU market looks to be approaching the end of its downward trend. Demand in the EU is expected to increase in 2014, even if just slightly. The major economies in the world will keep improving and, accordingly, demand for long steel products is expected to see parallel growth. Having said that, overcapacity will still be an issue, particularly in the EU, putting pressure on the market.

Competition in the long steel market is still very tough and is increasing even further due to several trade actions and/or barriers that are being implemented (in the US and Colombia recently). If the US dollar weakens further against the euro, there may be increased import pressure on the EU market. On a separate note, there may be even more pressure on the wire rod market globally. Under such tough competitive pressure, steel mills have been pushed further into the red and the only answer seems to be to cut production.

Ferrous scrap demand in the US has increased on the back of better market conditions particularly for domestic reinforcing bar mills. The same applies for countries in the Black Sea region and in continental Europe.

Outlook for November

The long steel products market is gaining traction in certain areas of the world and showing a slight improvement in others, although demand is still very much disturbed by the political situation in Syria and in the wider MENA region.

The current relatively strong demand for ferrous scrap in the international market is expected to slow down once mills build up adequate inventory for the winter months.

Long steel product prices are expected to increase gradually throughout the first quarter of 2014.

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