Overcapacity and protectionism to remain key issues in 2013

The 68th meeting of IREPAS (International Rebar Exporters and Producers Association) was held in Doha on March 3-5, 2013. There were 76 producer representatives amongst the 210 registered delegates from 60 different countries.

Yusuf Guven, chairman of the IREPAS Raw Material Suppliers Committee, said that the iron ore inventory strategies implemented in China resulted in increased iron ore prices. He went on to state that China has been importing scrap from the US in line with the uptrend in iron ore prices and, because of this, some scrap availability issues have been seen in the rest of the world. Contrary to the usual seasonal winter situation, scrap inventories have not been available at US ports this winter. Also, domestic scrap prices in the US have moved upwards by $20-40 per ton.

Mr. Guven added that an increase in scrap consumption has been observed in Europe, while demand for steel is expected to remain strong in Turkey. He stated that it is not possible to say scrap is in short supply when looking at the global situation, noting that a certain supply and demand equilibrium exists in the market.

In conclusion, the chairman of the Raw Material Suppliers Committee told participants at the Doha meeting that there are no expectations of high volatility in scrap prices globally, while greater pressure may be seen on prices since scrap consumption is increasing.

Michael Setterdahl, chairman of the Traders Committee, stated that customers worldwide currently prefer to keep their inventories at low levels and to maintain a “sit and wait” stance. “With improved political stability, people will think more optimistically, and when they think like this they buy more steel,” he added, underlining that the trends in scrap and iron ore, coking coal and natural gas are key when watching the global markets. In addition, shortages of electricity, in China for example, should be observed.

The chairman of the Traders Committee also remarked that the economic situation is ready to take off.

Mr. Setterdahl concluded by saying that it is good to see no negativity in the MENA region, while trade between the GCC countries has increased and so the supply and demand situation is more balanced in the region; however, he added that it is unclear whether this situation is permanent.

Ugur Dalbeler, chairman of IREPAS and of the Billet Suppliers Committee, stated that in 2012 the low trend of iron ore prices put pressure on flat product prices. As a result, producers preferred to produce billet rather than slab if they had the option. Even some blast furnaces in Brazil reduced capacity in order not to produce more slabs. Therefore, more billets and less slabs were produced overall in 2012, while in 2013 the expectation is for a significantly reduced
billet output. Mr. Dalbeler said that the committee does not believe that scrap prices will go down and, as steel billet prices seem rather stable, this situation puts pressure on producers.

The IREPAS chairman also said that electric arc furnace-based producers and even integrated mills will either have to raise their prices or they will have to consider reducing their production. In conclusion, he stated, the committee’s view was that, although 2013 seems set to be characterized by sideways price movement, it will definitely be a better year than 2012.

Kim Marti Subirana, chairman of the IREPAS Rebar and Wire Rod Suppliers Committee, stated that 2013 started slower than expected but added that the year will be better than last year as the long steel products market will gain momentum. Business in the Middle East is looking good on the back of ongoing projects, while new projects are also being started. The committee chairman pointed out that new production capacities in the Middle East are on the way and that everything seems under control.

“The Turkish long steel market seems strong with new projects and demand, the Asian markets similarly appear strong, while the situation in Africa is relatively good,” he added. Business in Libya is slow at the moment but the country shows some limited signs of improvement and it is back in the game. Egypt, on the other hand, Kim Marti continued, has been experiencing some restrictions in relation to the US dollar, but business still continues in this country. Although Brazil had been expected to perform better than it actually did, the situation in this country still seems positive, as does the situation in South and Central America. Regarding North America, the committee predicts a good year.

The committee is optimistic regarding 2013 as general demand looks good globally. However, the committee also discussed import restrictions in certain countries, notably in Egypt and Morocco, which constitute a cloud in an overall clear sky.

The emerging markets continue to be important in rebar consumption, Mr. Marti added. He stated in conclusion that long steel product volumes are looking for new markets and this is putting pressure on the markets in question. “We need to correct the supply and demand balance in order not to place pressure on markets,” he said.

Notes to Editors:

IREPAS is a global association of producers and exporters of long steel products. It was founded by CELSA and GERDAU 30 years ago to develop understanding between producers, traders and consumers around the world. Today, IREPAS unites producers, traders, consumers of steel and professionals from the shipping and finance industries.