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Scrap price bounce may boost steel: Irepas

Keywords: Tags  steel producers, raw materials, Irepas, rebar, International Rebar Producers and Exporters Association, steel, Sean Davidson

NEW ORLEANS — Steel producers in Turkey hope that a possible recovery in raw material prices will trigger a similar uptick in the finished steel market, if only in sentiment.

"The situation in the market is critical," the International Rebar Exporters and Producers Association (Irepas), an Istanbul-based industry group, said in its June outlook. "The holiday season is ahead, and there are no great expectations for the short and medium term. That said, raw material prices are now very close to the bottom and a possible rebound in the coming weeks would change the mood in the long steel market."

The association said that raw material prices nearing bottom is a "(ray) of light for the long steel market."

A continuous decline in prices of raw materials has led downstream consumers of steel products to delay several purchase decisions, causing apparent demand to fall, according to Irepas. In some markets, such as Europe, this has put additional pressure on product prices, it said.

"Demand seems to have dried up almost completely in many regions, while stocks at steel mills are quite high. The mills have been and are still trying to adjust production, but apparently such efforts have not been sufficiently significant in scale or consistent enough, unlike the success of output adjustments at the end of 2008 and in early 2009, when the industry experienced a similar negative business environment," the organization said. "Consequently, there have been plenty of options for buyers in the market lately. Under these circumstances, buyers are opting to wait until the last minute before placing an order and, when they do eventually order, the lead times are quite short and transaction volumes are being kept as low as possible."

Irepas cited the recent decline in the U.S. purchasing managers’ index to less than 50 percent as one of the many negative economic indicators in the market today (, June 3).

Although domestic demand in Turkey remains healthy, the uncertainty of surrounding markets to which Turkey exports remains a concern. However, one bright spot is a gradually improving market in parts of the Middle East, where large infrastructure projects are under way, the organization said.

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