Pandemic is shaping trends in the long products market

According to Alexander Gordienko, international sales manager for Celsa Group, global consumption of long products is likely to fall by -2.7% year-on-year to 878.6 million tonnes in 2020, with the steepest drop in the section. used mainly in commercial construction.

In the meantime, the Covid-19 pandemic has reinforced the current trend in steel production and consumption from advanced economies to Asia. “It didn’t change the direction of the market,” Gordienko said Monday during a virtual meeting of the International Association of Exporters and Manufacturers of Valves (Irepas).

Growth in Asia is driven by China, whose government implemented a giant $ 527 billion infrastructure investment program in 2020, up 90% from 2019. As a result, exports of Chinese long positions are expected to fall 24% this year to 6.4 million tonnes, while apartment prices decline 16% to 16.3 million tonnes.

Global rebar consumption fell -1.8% year-on-year in the first half of 2020, after reaching a record annual high of 410 million tonnes in 2019. All countries were affected, with the exception of China, where usage rose 4.8%.

Wire rod is performing better than rebar this year due to downtime in wire rod production, especially in Europe, and because China is exporting fewer materials. Recovering idle facilities is not easy as they mostly operate in blast furnaces. According to Gordienko, this trend will continue for some time.

When asked how rebar prices managed to stay afloat despite the pandemic, Gordienko noted that most rebar factories are scrap-based electric arc furnaces that operate with low margins driven by metal prices. The pandemic has led to a shortage of scrap, which has put pressure on raw material prices. Secondly, China imported huge amounts of semi-finished products from all over the world. “This created a bottom for the market,” Gordienko said. "If you couldn't sell rebar ... you just sold the billet to China."

The spread between imports of scrap metal from Turkey and exports of rebar is historically low, but should improve significantly in the second half of the year as the market recovers, Gordienko said.

However, the second wave of the pandemic and related restrictions, the US presidential election, China's secession from advanced economies, and reshuffling of supply chains are all causing uncertainty in the market.

Moreover, while the European construction sector is expected to perform well until February next year, there is