Irepas: The global long products market continues to decline due to low demand and oversupply
Overall, the business environment in the global long products market has deteriorated further, while demand has remained stagnant while high supply continues to put pressure on prices and profits, the International Rebar Manufacturers & Exporters Association, or Irepas, said in its latest short-term forecast issued on July 8.
"However, in addition to the positive development in the face of easing tensions in the Middle East, some producers have heard that production has begun to decline in response to market conditions that should help improve supply and demand balance over time," it said.
Noting that demand was undermined by a low level of confidence, Irepas said that an increase in supplies of Iranian and Russian billets could lead to lower prices for rebar.
On July 7, the Platts agency, part of S&P Global Energy, estimated the export billet from the CIS at $462 per metric ton FOB Black Sea, which has not changed compared to the previous day. Platts' estimate for Turkish imported billets on July 7 was $490 per ton CFR in Turkey, unchanged from the previous day, while market prices were quoted in the range of $480-490 per ton CFR in Turkey, or $452-462 per ton FOB Black Sea, including freight of $28 per ton.
"As for costs, as energy demand increases due to seasonally high temperatures, a higher electricity price will also work against the interests of producers," Irepas said.
"Despite the announcement of a quota reduction of almost 50%, the European Union has managed to raise their prices, but now their prices are falling back to where they were before, as demand throughout the body is weak for the EU," the association added.
As for Asia, Irepas stated that there is "nothing positive" in the region, except for a gradual decline in production in China. However, she added that this would not change anything in the short term, noting that Chinese steel exports continued to increase.
In the Middle East, it was said that greater stability could contribute to a gradual recovery in economic activity and demand for steel, especially in the Persian Gulf markets.
"This suggests that reconstruction needs and investments can support the market as soon as geopolitical conditions return to normal. These developments give grounds for cautious optimism regarding the medium-term prospects," the report says.
Author: Jenk Kahn