The revival of global economies, political stability, and the possibility of steel demand rising could likely make 2021 a year of rebounds, according to the Irepas monthly short-range outlook.
However, the long steel products market is not entirely out of the woods despite posting good margins for December, Irepas indicated. This market is facing more concerns in February and March since China, which increased its presence in the export market by entering at prices comparable to other sources ended up lowering its prices quickly.
The China factor
China, according to the report, will be a significant player in 2021. The Asian nation’s longs output has increased because of which it may export more products leading to a moderation in price hikes compared to December 2020. To date, Chinese exporters have been giving mixed signals, thereby raising concerns. However, more clarity is expected once businesses reopen after the Lunar New Year holiday.
Irepas anticipates China may lower its production in March failing which, the price increase for raw materials will be maintained and the level of competition in the global market will be higher.
Scrap prices flip-flop
The unexpected hype in prices of scrap and subsequently steel since December gave the impression that the market could see a super cycle in 2021. However, the market turned sensitive in January after prices, which had moved up too rapidly in anticipation of a quick recovery, saw a steep decline.
It was thought back in November that domestic scrap prices in China would reach international price levels, but the opposite happened. Cost of production seems to be the last thing on the minds of market decision-makers on sales prices. Not even the Chinese have this issue figured out as they have a rebounding economy and worse margins now than back in November last year.
However, Irepas expects the scrap market to remain tight and demand elevated with strong steel production and stretched-out order books moving forward. Renewed buying from multiple markets is also anticipated towards the end of February.