Global longs market gradually scrabbling back towards normalization

The global long steel products market is gradually scrabbling back towards normalization. As effective vaccines are being rolled out, the markets are realizing that we are returning to normal. Business is flourishing. Supply chains are currently restocking and orders are solid, while production levels are not keeping up.

Much better situation prevails now in terms of market prices

The situation is much better in terms of market prices as corrections in prices have already been seen, and price increases may be seen from now on. Low levels of inventory and increases in raw material prices are supporting the rises in finished product prices. As long as China’s net exports stay under 20 million metric tons per year, market conditions will remain good. If we can get over the pandemic by the middle of next year, we may see a similar situation as was seen in the first half of 2008.

Frenzied restocking in the US, no availability of prompt steel

In North America, the market trend started with the sharp reduction of steel imports into the US in August and then kept going. Restocking became somewhat frenzied: customers accepted the first price increases, and then were forced to accept increases thereafter. Expensive steel now is perceived as a safer bet than expensive steel in March. There is no availability of prompt steel at present.

Market in US worsens for traders

However, the market in the US has worsened from the traders’ point of view. The short-term demand increase was more based on restocking. Buyers’ desire to purchase ahead of additional price increases added to further buying. Raw material prices rose higher every week. Import prices followed immediately, whereas the US domestic price increases occurred with a delay of two to four weeks, which made imports very hard to sell. Allocations were also being filled very rapidly. Today, to have three to four months’ allocation for long products is not comforting. The possible price drop from recent highs is a deterrent from making long-term commitments for imports.

Imports become more attractive to European buyers

International prices are becoming a little more attractive to European buyers, following the upward trend in the EU market. But the uncertainty regarding safeguard quotas makes it still difficult for traders to collect orders. The euro-US dollar exchange rate is another positive factor which makes imports more attractive.

New US administration brings hope for greater sustainability

Having a new administration in the US is a positive, as it brings hope for more sustainability and for new debates instead of battles and threats among the big industrial nations. However, significantly, the US Senate election in Georgia in January will determine whether the Biden Administration will be able to make future decisions unilaterally.

Winter weather slow to arrive in northern hemisphere

The weather is still relatively warm in the northern hemisphere, with no winter in sight. A lot of stimulus measures and vaccines will help put the world back on track, while China continues to play a huge role, with a lot of energy. China is still performing well, with no signs of a slowdown. The US and EU have joined China as far as demand is concerned.

Vaccines bring hope for return to more normal life

Vaccines appear to be coming on stream in December and January and so there is finally light at the end of the tunnel for a return in 2021 to a more normal life. That said, the news regarding vaccines has been overshadowed by the rapid rise in steel prices. These can only give way to price corrections in the future, thus making today’s purchase decisions even harder to make.

Market situation stable with sole exception of US

The levels of competition in the market are still high, while the overall market situation can be described as stable and in perfect condition to proceed, with the sole exception of the US market which is unstable at the current time.

Very good outlook for next quarter, excepting US

China is quietly increasing its exports and reducing its imports. The current price levels will be sustained if not increased further in the first quarter. Sentiments regarding added risks and stimulus measures are putting pressure on the US dollar. The markets in the US will not be stable. The outlook for the next quarter is very good, with the sole exception of the US.

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