Posted on 23 Sep 2024
Increased Chinese steel exports are creating an imbalance in supply and demand, reminiscent of market conditions a decade ago. If China continues on this path, the global steel industry could face significant challenges, Kallanish notes from the 91st International Rebar Exporters and Producers Association (IREPAS) press release on results of meeting in Paris.
The markets are in a bearish mood and are holding back with a not-so-promising outlook, according to Murat Cebecioglu, IREPAS chairman.
China is flooding global markets with semi-finished and finished steel products, driving down prices and making competition tougher for other players. China’s exports have been increasing constantly, with the country’s average monthly exports trending at 5.6 million mt in 2022, at 7.7 million mt in 2023, and expected to be around 8.7 million mt in 2024, according to Wilhelm Alff, chairman of the traders committee.
While the optimism for the second half of 2024 has been postponed until 2025, slower Chinese production might benefit the rest of the world by reducing export volumes, according to Jens Björkman, chairman of the raw material suppliers committee.
Any surge in protectionist measures against China's increasing exports would only offer short-term relief by altering product flows rather than addressing the core issue, according to Wilhelm Alff, chairman of the traders committee.
Producers shared a pessimistic outlook, with the global market's future heavily influenced by China's actions.
Besides reducing production, China will also have to boost domestic demand, which is slow given the problems in the Chinese real estate sector. "Just reducing production by itself will not be enough; the government should provide some stimulus program as well," the IREPAS chairman said.
Traders noted that competitive Chinese billets are diverting Turkish mills from scrap purchases. Turkey has postponed scrap purchases this summer and autumn due to competitive alternatives of semi-finished products from Asia. Turkey is expected to continue importing billets, slabs, and HRC, which may negatively impact scrap prices.
The EU is experiencing a slowdown in scrap generation, as sales in downstream industries have decreased amid lower personal spending in the region. This lower scrap generation has led to stable scrap prices. Business activity in Germany, the main driver in the EU, is slowing down, despite initial improvements in the construction and housing industries at the beginning of the year. The positive effects of these improvements are expected to be felt in the raw materials sector until the end of the year.
GCC countries are feeling more optimistic than others, as their economies are on the rise, driven by new projects, particularly in Saudi Arabia, that are generating market demand.
"The near future does not look bright. We will probably see the same trend unless China stops exporting," Cebecioglu said.
Source:Kallanish
