China’s focus on EAF-based steel production and a limited supply of scrap in the EU and USA will drive long steel prices in the next quarter, according to the Irepas short-term outlook.
The global demand for ferrous scrap and long steel products continued to be high even during the pandemic, Irepas noted, while indicating a robust outlook for Q2 2020.
EAFs and imports reflect the current market
China’s renewed focus on electric arc furnace (EAF) based steel production is likely to drive ferrous scrap prices higher in the next quarter. Domestic demand and prices in the country have risen on positive sentiment after the Chinese New Year holidays. On the other hand, the European region’s imports have dropped and US importers remain under pressure, Irepas noted.
Steel prices in the EU are close to 2008 peaks and international prices are higher or equal to domestic EU prices. However, European steel association, Eurofer, is still seeking an extension on import safeguards because of which, the downstream industry is struggling with production volumes.
On the exports front, EU’s exports have reduced amid improving domestic demand in the region as mills benefit from lower competition from global markets due to the import restrictions by the EU.
Further west, US importers are dealing with containers shortage, higher freight costs and material prices, and overbooked domestic mills. These challenges will remain for some time, Irepas indicated.