Global long steel market faces challenges, uncertainties amid war in Ukraine: IREPAS

The global long steel market has been facing challenges and uncertainties since Russia invaded Ukraine, the International Rebar Producers & Exporters Association said May 10, with the market deteriorating as oversupply emerges in some regions.

"In particular, there is a vacuum in Western markets due to the war in Ukraine. Price hikes were very rapid and very steep, which could be a reason," it said in its latest short-term outlook.

Highlighting that energy prices have hurt manufacturing, especially in Europe, Irepas said inflation was also a factor hurting consumption.

"Though it is still difficult to comprehend why the market has been so silent during recent weeks and to understand what has been causing prices of scrap to drop by such significant margins," the association said.

Platts assessed premium heavy melting scrap 1/2 (80:20) at $530/mt CFR May 9, down a further $5/mt on the day, data from S&P Global Commodity Insights showed. That is also own from $654/mt CFR assessed on April 4.

The pricing premium on ferrous scrap, caused by Russia's war in Ukraine, deteriorated during April as Russian semi-finished products have been able to find destinations in Asia and Turkey via trading intermediaries, the association said.

"In uncertain times, a safe heaven is provided by the US dollar, which has been trading at a five-year high against the euro," it said. "This has been putting pressure on the commodity and ferrous metals sectors as well."

COVID-19 lockdowns in China have also had a negative impact on demand and prices, with global raw material prices coming under pressure, IREPAS said.

"The war in Ukraine and the worldwide uncertainty does not help the markets to resume their normal business mode," it said. "The situation is very challenging when trade is very intermittent and so competition is not very intense."

The current situation in the market can be described as fluctuating and unstable as market demand is intermittent, it said. The outlook, however, is still bullish despite current challenges, it said.