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Kallanish Kallanish

Knowledge matters Knowledge matters

January, 28th 2020

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Kallanish Steel Weekly: Steel supportive scrap rebound could be short-lived: Irepas (Nov. 19, 2019)

The scrap market has seen a fairly decent rebound and solid demand with balanced availability, but its sustainability is uncertain due to the lack of finished product demand. So says the International Rebar Exporters and Producers Association (Irepas) in its monthly short-range outlook published last week.

In a “…confusing” long products market environment, blast furnace raw materials are getting cheaper while scrap prices are rising, along with rebar and hot rolled coil prices, the association says. Customers are making inquiries for longer than they normally should and mills, incurring greater losses than they can afford, are halting production and have stopped offering.

“However, the current price increase should not hold long because the real problem is demand,” says Irepas.

The supply chain has been low on scrap inventory, which has meant that restocking has pushed international prices higher. China is meanwhile driving the international prices of basic pig iron, hot-briquetted iron, HRC and billet/slab, thereby realigning flows and supply-demand.

Chinese buying activity is supporting the steel sector heading into the winter period when emissions regulations will be stricter. Internal steel consumption in China remains high and the country is not increasing exports. “The situation in China looks good at least until the Chinese New Year holidays,” Irepas observes.