News Global Market US 08 November 2022
The association gives a negative forecast for the fourth quarter of 2022 and the beginning of 2023
The international association of rebar producers and exporters IREPAS notes the drop in demand on the world market of long products. This is stated in the overview of the association, reports SteelOrbis.
Global demand for long products was extremely low and competition among suppliers high, although this depended on the region. IREPAS gives a negative forecast for the global market for the fourth quarter of 2022 and assesses the prospects for the beginning of 2023 as gloomy.
The decline in demand for steel has led to a drop in demand for raw materials, as the steel industry cannot outline prospects. Businesses are under additional pressure from high energy costs, and some factories have reduced capacity or temporarily halted production. Additional shutdowns are expected as the demand situation will not improve in the coming months and market conditions will remain difficult, particularly due to the war in Ukraine.
EU. In the European Union the situation with energy prices has temporarily improved, but they may rise again. Another reason for the low demand for rolled steel on the European market is negative trends in the private construction sector, where activity has dropped to a minimum. Industrial and public projects continue, but competition has intensified in this segment. In such a situation, European factories were forced to reduce production and lower prices. EU mills are under additional pressure from imports, especially in the wire rod market, where Algeria, the UAE and some Asian sellers are active.
USA. In the United States, the situation for mills is still not bad in terms of earnings, although the decline in raw material prices is expected, and accordingly the price of steel products will correct. Considering this factor and the approach of the end of the year, most service centers do not want to replenish their stock. From a demand perspective, the continued rise in interest rates could have a positive impact on the construction sector. Business activity, pricing, and plant profitability in the US remain positive, and there are many barriers to imports in the United States.
East and Asia. As IREPAS notes, in general, market prices are under pressure from producers from East and South-East Asia, which are very active. In particular, the GCC countries (Cooperation Council of the Arab States of the Persian Gulf) offer low prices, which makes it impossible for Turkish producers to compete on the market of long products. China has recently become more aggressive in several segments, such as the billet segment. Offers of semi-finished products and long products from GCC countries are becoming more attractive to buyers outside the region.
Competition on the world market of long products remains very high, with the exception of markets protected from aggressive imports, such as the USA and the EU. Currently, the Middle East and Asia markets remain attractive, although trade is largely concentrated within the regions due to high international freight rates.
Under such conditions, IREPAS assesses the current situation and market prospects for the coming months as unstable. In addition, the negative consequences of the full-scale invasion of the Russian Federation into Ukraine will continue to manifest. The forecast for the fourth quarter of 2022, in particular, due to lower prices in Asia, and for January-March 2023 is also negative.
As GMK Center reported earlier, suppliers of long products in the EU are striving to stabilize the market – the level of stocks decreased, and the import of these products to Europe slowed down.