Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Steel mills are well-booked at high prices, so demand for ferrous scrap is expected to remain strong through the next quarter, according to the Irepas monthly short-range outlook.


Global demand for ferrous scrap continues to increase as steel production strengthens. Supply chains remain extremely tight in many geographies as inventories are low and finished product demand is high. Another major positive for the market is that global raw material prices have seemed to be levelling off at the recent high prices, which brings some stability for future sales. The attempt by China to push raw material prices down has not succeeded.


There is still a shortage of steel everywhere in the global long steel products market. Demand remains high in the sheltered markets. There is pressure from the Chinese government to reduce steel prices, but it is hard to imagine that this will lead to anything but more supply shortages, according to Irepas.


During the last two weeks of May, many thought that China would lower prices. However, the prices of Chinese steel and iron ore are trending upward again. The country’s reduced export capacity after removing steel export rebates in the last quarter has become beneficial to other countries. 


The world market will be in better equilibrium as China is almost completely out of the export market now.

Reinforcing bar prices in the EU market have reached a 13-year high and the demand there is still strong. Prices of deformed bars are not bound to scrap prices anymore. Some mills have long lead times and those who have the material in stock are focusing more on prompt deliveries of smaller volumes, which increases the pressure on the buying side. Due to the lack of import options, buyers have no option but to accept these new prices in order to fulfil orders for their clients in construction. The impact of the EU safeguard measures on steel imports can be seen clearly considering 30pc of deformed bars consumed in Germany and the Benelux countries were imported before safeguard measures were introduced, whereas the share of imported steel is now down to only about 5pc.


Demand in the US is strong in spite of the high prices in the market. At present, the problem is on the supply side. Most mills are sold for one to two months forward and have less availability of any prompt shipments. Naturally, prices are at an all-time high and appear to continue this way throughout the third quarter. Some mills are adding additional capacities and labour shifts, and so the supply side is expected to be in check in the fourth quarter.


Vaccinations have been carried out very rapidly before the summer in the US and the EU and so these regions are gradually returning to their pre-Covid days. New infrastructure and construction projects are being approved in Europe and the US. Regional and domestic demand in both continents is stronger than normal. The Russian market also remains robust, Irepas noted.


The current status of the market can be described as generally stable, with some short-term fluctuations possible. The outlook is certainly satisfactory if not outstanding. Going forward, competition will probably only be seen in Asia with some volatility, but it seems the overall situation will remain “perfect to proceed”.


Leave a Reply

Your email address will not be published.