NEW YORK Output cuts by producers of long steel products in countries across the globe could help bring balance to an industry struggling to meet market challenges, according to a short-range forecast by the International Rebar Exporters and Producers Association (Irepas).
Market circumstances "are already very tough, and the outlook does not look very bright in the short term, but production cuts are expected to help achieve a restoration of the balance between supply and demand," the group said in an outlook released April 9.
Demand in the global long steel products market is still low due to a long and cold winter in the Northern Hemisphere, especially in the European Union, the association noted.
"The situation in the E.U. market has gotten worse, as there are too many offers in the market and this has caused buyers to become even more reluctant to purchase. Elsewhere, the market situation does not show any improvement compared to one month ago," it said.
The outlook for raw materials also appears dire, Irepas said. "There is an overhanging fear in the market that iron ore prices will move down even further and that the ferrous scrap market will have to undergo a downward adjustment also, in addition to the fear that the market situation in China will deteriorate," it said.
Looking at the positives, Irepas said steel producers are taking "the necessary steps" to overcome global oversupply, while consumption has increased in the U.S. market. Weather conditions, particularly in Europe, are improving and will hopefully help bring better demand back to the market, it added.
Meanwhile, Irepas said increased competition brought in part by "a sudden change of mood" in the Chinese domestic market has triggered some "protectionist measures, which are already in place or being studied in a few markets (thereby) increasing pressure and subsequently competition in other areas."