May 6, 2024

Steel Market Summary - International

Weak International Sentiment Faces Chinese Aggression

Two major international organisations have offered a pessimistic view of the steel industry for the remainder of 2024 and into the near future. IREPAS and Eurofer both also say that increased exporting by China is making a bad situation worse. The 90th meeting of IREPAS (the International Rebar Exporters and Producers Association) was held in Berlin over April 28-30. Opening the conference, Murat Cebecioglu, chairman of IREPAS, said the global long steel products market is deteriorating and that demand in the market continues to lag behind supply. He forecast China’s aggressive export policy to continue and that this will drive other Asian exporters to be aggressive as well. The IREPAS conference also heard that ongoing trade tensions, global conflicts and political instability have changed trade routes, resulting in regionalization. As an example, Jens Björkman, the chairman of IREPAS´s raw material suppliers committee, commented that the anticipated increase in scrap demand due to


electric arc furnace investments especially in the US, Canada and Europe would change scrap flows significantly over the next 10 years. This would lead to the regionalizing of scrap generation to where scrap demand is high. He also said steel producers have started to look for alternatives to scrap – such as pig iron, HBI and DRI to cover their needs for raw material.

Eurofer – the European Steel Association – was founded in 1976 and represents the entirety of steel production in the European Union. Its latest Economic and Steel Market Outlook predicts the European steel market will continue to lose momentum during 2024. It cites high energy prices, persistent inflation and elevated interest rates as having negatively impacted demand. This prompted a more severe downturn in 2023 than previously projected (-9%, instead of -6.3%) and weaker growth in 2024 (+3.2%, instead of +5.6%). Furthermore, imports had captured a staggering 27% market share throughout 2023, the Outlook claimed. “These figures underscore the urgent need for action if we want to ensure a resilient future for the European steel industry,” said Axel Eggert, Director General of Eurofer.

Forecasts that China’s domestic steel demand is unlikely to increase in the medium term have highlighted concerns that its growing exports will continue to apply downward pressure to global steel prices. According to data from China Customs, net exports of semi-finished and finished steel in March rose 29.8% on the year to 9.44 million metric tonnes (Mm/t). These outflows were the highest since July 2016, according to S&P Global Commodity Insights. In the first quarter of 2024, net exports of semi-finished and finished steel from China increased 35% on the year to 23.71 Mm/t. Analysts believe China´s focus on overseas markets is likely to persist. In its latest short-range outlook report, the World Steel Association forecast that overall steel demand in China had “reached its peak” back in 2020 and it would remain flat in 2024. Next year will bring a further 1% decline in demand, it said. Meanwhile, the state-backed China Metallurgical Industry Planning and Research Institute forecasts a 1.7% drop in China’s steel demand this year, following last year´s 3.3% decline. Analysts says East Asia’s steel markets are increasingly vulnerable to the effects of Chinese exports. Whilst trade defence measures in Europe and the US serve as a protection for those areas, China’s neighbouring countries are increasingly exposed to any overcapacity.