Posted on 07 Apr 2020
The second quarter will be one of “… volume survival,” says the International Rebar Exporters and Producers Association (Irepas). Economic activity should rebound after the coronavirus peaks, which could be in Q3, as long as social unrest is avoided, it adds.
There will be massive capacity reductions in Q2, on top of the Easter and Ramadan periods, with pricing and volumes at a low point.
The regionalisation of markets is now being reinforced by the pandemic. Some regions may see shortages and some others surpluses, and it will take time for this to balance out. Significant price differences may be seen between regions, as was experienced decades ago.
Some rebuilding and stimulus going on in China has propped up pricing and demand, but the rest of the world is in the early or middle stage of the pandemic. Production stoppages have occurred due to broken supply chains. Most businesses are running at significantly lower rates, if at all.
“The stoppages of active steel production capacities are not really being coordinated,” Irepas says in a note sent to Kallanish. “Far too much capacity will disappear at the same time in certain regions. It is highly likely that these production capacities will come back to the market in just as quick and uncoordinated a manner.”
Oil prices have tumbled as global demand has plummeted, with raw material prices following suit. Incoming raw material supply is slowing fast. “In some cases, demand is still good but raw material needs cannot be filled,” Irepas observes. “This is a very unusual situation. Ferrous scrap availability is significantly lower as industry and trade has been grinding to a halt through the Western world.”
The Chinese pick-up in activity after the coronavirus crisis at least gives some sort of hope to the rest of the world currently in lockdown, the association comments.
Source:Kallanish
