Posted on 09 Mar 2021
Long products markets have the potential to be very strong in the second quarter, but there are questions over how long demand will sustain and if supply can be adjusted when demand dips. So says the International Rebar Exporters and Producers Association (Irepas).
Exports of scrap from Europe are slower due to intra-European demand being strong. “European political activity and industry protectionist efforts to limit scrap exports from Europe are troubling and pose a risk for free trade going forward should they succeed, even if partly,” Irepas warns in its March short-range outlook.
EU mills are aware that benders will need to restock shortly as inventories are depleted. Safeguard quotas are tight and could be extended beyond June despite imports dropping to historically low tonnages. “Mills can sit back and wait until buyers are obliged to make a move,” Irepas says in the note seen by Kallanish. “In the meantime, the mills have to watch out for opportunistic exporters from other regions.”
The association does not see any justification for an extension, however, with end-users having trouble sourcing the material they need. “Steel prices in the EU market are almost as high as at the peak in 2008 and international prices are even higher or equal to EU domestic prices,” Ireps observes. “Moreover, China – the preferred enemy of EUROFER – is not really interested in exports anymore but is seeking to cut back steel output. China may also cut back the tax rebates on exports, which would certainly have a further negative impact on export volumes from China.”
In the US, importers are dealing with shipping difficulties, in addition to supply shortages, due to container shortages and local port congestion. Product and shipping prices are at historic highs. Most domestic mills are fully booked through May and June, making future sales even more difficult, and it is clear the Biden Administration will not immediately change Section 232 measures.
China has nevertheless returned after its holiday in a positive mood, and its rebalancing towards electric arc furnace-based steelmaking will likely increase pressure on scrap prices, Irepas concludes.
Source:Kallanish
