EU longs market could benefit from weaker euro, oil prices, Irepas says
Lower oil prices and a weaker euro could sustain activity in the EU long steel market at levels better than those forecast, the International Rebar Producers & Exporters Assn (Irepas) has said.
Paragraph entered by Atlantic migration, in order for SteelFirst articles to display correctly on Metal Bulletin.
“The EU is well positioned, compared with other markets that will be affected to a higher degree by the change in energy prices and availability,” Irepas said in its short-term outlook published on Friday January 9.
“European domestic demand will likely be supported by the weaker euro against the US dollar, and this will help keep production levels stable in Europe,” it added.
North American long products markets are also likely to show strong activity after the quiet holiday period, but the global outlook looks less rosy, Irepas said.
The global long steel market situation has worsened as stagnating demand has seen more aggressive volume and price offers, particularly from Russia, Ukraine and China.
The removal of the export tax rebate on boron-added steel products in China could have a positive effect on the market, but the outcome “remains to be seen”, according to Irepas.
The falls in oil prices and subsequently energy costs will be beneficial to the supply side of the steel industry, but are not expected to have a positive effect on steel demand, particularly regarding supplies for wind farms, offshore steel platforms and foundations for pipelines.
A strengthening US dollar could also limit production costs, because “it will be very hard for scrap prices to further increase or maintain their current levels”, despite fairly tight availability of the raw material in the coming months in both Europe and the USA.
Currency fluctuations have increased trading risks, however, Irepas said, while the full effects of China’s rebate removal, and the consequences of the oil price slump on steel demand in the Middle East and the USA, blur the short-term outlook.