Gloom persists in global longs market, no sign yet of corner being turned

Demand in the global long steel products market continues to lag behind supply and the bottom of the market may not have been seen yet. The steel volumes being produced and being consumed are not growing. On the contrary, they are down in most regions.

A lot depends on China

Everyone one is expecting some move from Beijing, to slow down exports from China. The iron ore price has dropped down under $110/mt and there is talk about it falling further unless Beijing comes up with something great for the market. Chinese steel is still looking for export markets.

Turkish mills still struggling, may be forced to cut outputs further

Turkey has export markets, but not at prices that can be financed without pain. Demand in the EU needs to improve. Otherwise, along with the continuing Chinese exports, Turkish mills will be forced to reduce production further.

Total stagnation reigns in EU, safeguard extension to keep imports away

Business in the EU has neither improved nor worsened. It is in total stagnation. This situation has been continuing in the EU for about a year now and there are no signs of improvement in sight. Investments are still low despite the interest rate decrease and most of the cut and bend shops have free capacities such as they have never had for ages. In general, this situation is good for building and infrastructure, but the overall mood is bad. The extension of the safeguard measures for another two years in the EU, which will probably be replaced by the CBAM, will keep imports away from Europe despite the need to meet the CO2 emission agenda and the lack of adequate qualities for some products. It looks like Europe is supporting old industry instead of investing in new industry and technology.

US producers doing well amid satisfactory demand and import barriers

In the US, demand is satisfactory. The majority of demand comes from infrastructure projects, new renewable energy projects and some commercial construction. Residential construction is still slow due to high interest rates. As far as supply is concerned, US domestic mills have built enough new capacity to meet all demand and therefore the price is at the same level or better than import prices, making imports not so attractive. Of course, Section 232 and additional antidumping and countervailing duties make imports even less viable. China’s additional exports are not a factor in the US as there are even more duty barriers against them. Of course, this is only good for US producers.

Margins eroded as ferrous scrap prices hold their ground

The ferrous scrap price in the international market is still holding, which eats the margins of steel producers down towards zero. North American scrap has been down every month this year, yet flows keep on coming. June is usually not a positive month.

Most market players optimistic for the longer term not the near term

Most players in the market believe that a better future lies ahead. However, taking into consideration the approaching holiday period, it is hard to hope for something positive in the short run.

Regionalization continues to gain ground

The market is very much regionalized and will certainly continue as it is. More and more markets worldwide are closing their doors, as in a new fashion, and those with overcapacities of production will suffer. At the same time, downstream industry will suffer everywhere where no competitive feedstock products are available. Consequently, the EU will be bombarded with ready finished products from the same sources which previously provided only the feedstock products.

Competition intense wherever Chinese exporters are operating

Competition is active and intense where Chinese exporters are active. Otherwise, the global market is quiet.

Market unstable and fluctuating except in EU, outlook unsatisfactory

Under the current circumstances, the market can be described as unstable and fluctuating, with the exception of the EU where it is stable but at a low level. Market players are mostly in wait-and-see mode, but the outlook is unsatisfactory and in line with the international political outlook.

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