According to the latest short-range outlook from Irepas, conditions in the global long steel market have deteriorated further, with no signs of a demand-led recovery.
Instead, the market is being shaped by a supply-side shock. Ongoing conflicts, particularly in Iran and Ukraine, are disrupting supply chains and driving up energy, electricity and freight costs. These cost increases have translated into higher steel prices, which have so far been largely accepted by the market.
Much now depends on the stability of the recently announced ceasefire in Iran. If it fails and energy prices remain elevated, the report warns that several economies could slip into recession, with significant implications for steel demand and industrial activity. At the same time, rising transport costs, growing uncertainty and increasing protectionism are further complicating global trade flows.
On the raw materials side, US ferrous scrap exports are declining amid stronger domestic demand and weaker pricing in Asia, while the UK is shifting towards containerized scrap shipments to Turkey.
Despite the challenging environment, some short-term support is emerging. Uncertainty is prompting contractors to secure material in advance, leading to increased pre-ordering activity. In addition, inflationary pressures are encouraging precautionary stockbuilding, temporarily lifting apparent demand.
Regionally, competition dynamics differ. The US market remains largely domestically driven, while the EU combines strong internal competition with limited imports. In contrast, competition in other regions is more global and intense.
Rising energy and scrap costs continue to weigh on margins across the industry. While the market has so far absorbed cost-driven price increases, the broader economic impact remains unclear. The sector may need to adjust to structurally higher energy costs, new trade flows and shifting raw material availability.
Overall, the market environment is described as highly unstable and closely tied to geopolitical developments, particularly US policy decisions related to the Middle East.
Looking ahead, the outlook for the next quarter remains uncertain. A sustained ceasefire could support a gradual recovery in demand and improve market sentiment. However, a renewed escalation would heighten recession risks and further weaken industrial activity, with negative consequences across most steel-consuming sectors.
Source: Irepas, Photo: Fotollia
