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

Steel mills across the globe including Europe, Canada, Israel, the US, and the UK have seen continued healthy demand with strong order books, well into the long term, according to the Irepas monthly short-range outlook.


The steel supply side is slowly rebounding with ongoing supply shortages throughout the Western world, especially in the US. Increasing demand should carry through the end of 2021 if not longer. 


Global long steel products remain optimistic overall, bolstered by demand, however increasing logistics costs and timing interruptions are impacting shipments.


Exporters are burdened with rising freight fees while container shipments also report difficulties. Although steel from Turkey and Asian flat-rolled or coated products, continue with strong shipments to several destinations.


Extending EU protections will affect pricing, along with the export duties from Russia. Russia’s 15pc export tariff will likely impede international supply. Several Russian mills have full order books for the upcoming months which should prevent the need to sell impulsively while prices remain solid. If Russian producers absorb the new export taxes, pricing should be well supported.


Global steel production, including output in China, increased 15pc during Jan-Apr also leading to price pressure. 


Turkish struggles are ongoing due to elevated interest rates and inflation, pressuring rebar demand. However, export volumes in Turkey rose 16pc in H1, although not adequate to bring relief for domestic producers.


European demand remains healthy with record-high prices for deformed bars, wire rods, and mesh. The unchanged EU extension for three more years of safeguard actions came as a surprise. The EU, like the US, continues with its Section 232 constraints.


Europe’s downstream market did not receive ample backing in Brussels, that deemed trade deflection risks to remain high for Europe. If the US updates its legislation, the EU will probably follow. However, in addition to prices, consistent steel availability is an industry problem. Although demand remains high, consumers experience supply problems and new rebar import quotas into the EU were virtually expended in the first week of the allocation.


Freight rates have soared for all transport modes making long-distance shipments hard, also on ferrous scrap. Rising demand for scrap and steel in Europe along with traditionally high spreads in scrap compared to steel prices have led to ongoing trading within the internal region. 


Shredded prices have also risen compared to HMS in the international markets. Demand should remain strong into Q3 also leading to continued, increased European consumption. By August, Russia may see adverse effects as exporters quickly sent material to docks.


All global markets are running strong on high consumption levels with continued, insufficient material accessible for full restocking.


Iron ore prices range between $210-225/mt while ferrous secondary scrap grades are in ample supply. Prime grades from new production and shredded scrap remain in high demand in Europe and the US, with strong spreads over secondary scrap grades. Spreads between shredded scrap and hot-rolled coil are at record highs while long product spreads are much lower yet twice as high as typically seen in the market.


Rebar prices are currently at 52-53¢/lb or $1,136-1,168/mt ($1,030-1,060/nt) fob US Midwest mill and higher in the West Coast. This compares to $1,036-1,080/mt on Jun 30 and $904-948/mt on May 3. The rebar market has been strong, with tight material availability and transportation challenges.


The main competition on the supply side is typical, while price competition continues between Turkey, India, Vietnam, and China, with the latest competition shifting from steel producers to steel consumers.


The market environment is seemingly upbeat, solid, and holds an adequate outlook. This will likely continue into next year, Irepas indicated. 


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