The spread between Turkish scrap import and rebar export prices has narrowed to its lowest level since August 2017. This is down $55/tonne from its peak in August 2018, according to the International Rebar Exporters and Producers Association (Irepas). Despite the trade war, the global long steel industry – bar Turkey and the Middle East and North Africa – is in its best shape since early 2008.
Scrap prices remain firm, thereby keeping steel prices stable, but billet and slab prices are being pressured by oversupply.
Steel trade is becoming ever more regional, with imports into Canada seen difficult following the latest safeguard decision. Canadian domestic prices should rise as a result, with US prices seen doing the same considering Canada is the largest supplier to its southern neighbour. Uncertainty remains over whether the US will bring tariffs on Turkish steel back down to 25%.
Winter production restrictions will take further Chinese material out of the export market.
In the EU, the rebar import quota is gradually being filled and it looks like imports could become risky by January. Prices in the regional market are seen firming up towards the end of the quota term. However, some expect the EU to extend the import quota system to last beyond its current deadline in February. EU imports are made difficult by the weakening of the euro and low water levels on all EU rivers, which has caused freight increases to treble.
“The EU has been a solid market for Turkish mills to replace the quantity previously shipped to the US,” Irepas says in its November short-range outlook sent to Kallanish. “However, Turkish mills still suffer from very bad domestic market conditions. Under such market dynamics, it is pretty difficult for Turkish mills to pay the current prices for scrap.” Scrap prices nevertheless remain elevated and low Rhine River water levels have withheld some exports.