IREPAS Terms Current Crisis as once-in-a-Generation Event
The 87th meeting of the International Rebar Exporters and Producers Association in Monaco, IREPAS Chairman Mr Murat Cebecioglu has warned that the situation in the global long steel products market is deteriorating as it has entered a rising-cost business cycle. Mr Murat said “The situation is dramatic and huge uncertainty lies ahead. The current crisis is a once-in-a-generation event with mills and consumers facing an unprecedented increase in energy prices, particularly in the EU, but also almost everywhere else. In addition to the energy crisis, there is also a logistics crisis. Production cuts are expected soon, which will balance the drop in demand caused by higher interest rates and costs, as well as by shortages of many items.”
Steel Orbis Conference’s raw material suppliers committee Chairman Mr Jens Björkman added that “US scrap demand had slowed down and that mills there are running at slightly lower capacities, pressuring scrap and iron ore prices, adding that supply of new production scrap which was previously in good shape has been slower. Also, for China, despite a significant stimulus, demand for steel and raw materials has been weakening, with the outlook remaining negative. Scrap demand is significantly lower in some parts of the EU, and this has been offset by Southeast Asian demand where energy problems are not so severe. Also, logistics are another issue for the EU market given the all-time low water levels on the Rhine River, as Europe’s river system is an important part of the EU’s scrap exports.”
He added “The demand situation in Turkey, which has also been struggling with high energy prices, is under pressure from alternatives to scrap such as semi-finished products, which it has been possible to get at lower price levels. Turkey is not only buying Russian billet, but also ex-Asia billet, and that the pressure coming from cheaper billet is affecting Turkish mills’ ability to buy scrap.”
He added that, thanks to the alternative destinations for scrap such as some Asian countries, the pressure on prices in the market which Turkey was able to exert has been mitigated, though these alternative destinations are not likely to become permanent markets, and so Turkey will maintain its role in setting a benchmark in the international scrap market.
Regarding the possibility of a ban on scrap exports by the EU, Mr Björkman said that it is becoming likelihood and that any potential ban seemed to be targeting non-OECD countries at first, but now OECD countries seem likely to be included as well. The European Parliament will vote on a ban on November 17 and it could come into force in 2026. He added that the scrap tonnage recycled in the EU is too large; even if a few million tons will likely remain in the EU, the rest will need to find other markets.