NEW YORK The embattled long steel products market is likely heading toward a new pricing floor and any rebound is a long way off, according to a short-range forecast by the International Rebar Exporters and Producers Association (Irepas).
"(The) situation in general is very difficult, as the market is looking for a new direction and is probably heading towards a new baseline," the association said last week in its May forecast.
"The outlook still does not look very bright in the short term," Irepas said. "Consumers are trying to forecast the second half of 2013 but still see clouds on the horizon. After a long-standing low and flat market trend, we may see some improvements during the last quarter of the year."
Demand in the global long steel products market failed to recover in April, with business volumes showing significant declines in the overall global marketplace, "even though volumes are either unchanged or have increased in some regions," Irepas said.
Finished product prices in East Asia have fallen slightly due to an increase in Chinese output and supply, with no demand improvements in Europe.
In the Middle East and North Africa, political instability has hampered growth and protective measures imposed by countries such as Egypt and Morocco are set to further affect the region, Irepas said.
Prices fell in the U.S. market in April as supply improved as demand stayed flat, it said.
While demand remains a concern for long steel producers, scrap supply has picked up. "However, demand for scrap is also lower due to reduced steel production, as steel producers continue to adapt production levels to market conditions," Irepas said. "Consequently, further production cuts put a lot of pressure on scrap prices, helping steel producers to protect their margins, if they have any."
The news is not all dire, however, with business in such countries as Saudi Arabia and Qatar staying healthy. "Competition in the market is still very strong, while some market players seem to have already given up," the group said said. "Some steel producers are capitalizing on their advantages in terms of raw material costs. But in general the focus is mainly on securing new orders rather than on the competition issue under the current, very unstable market circumstances."