Posted on 26 Sep 2019
Mounting uncertainties and the recent scrap price drop could temper the 2.4% global long products consumption growth forecast for 2019. Rebar consumption had been forecast in mid-year to rise 2% in 2019 to 390 million tonnes, Celsa Group commercial director Kim Marti said at this week’s Irepas meeting in Düsseldorf.
Robust construction activity in China, India and the rest of Asia will offset the effect on rebar and merchant bar demand, especially, of slowdowns in North America, western Europe and Turkey, Marti observed.
Asian construction industry growth will slow to 4% in the coming years from 6%, but North Africa, Middle East and South Africa will accelerate to 6% from 4%. Chinese construction is slowing but will continue to be supported by government spending, while Indian growth will remain healthy despite this year’s slowdown.
Global longs consumption rose 10% on-year in the first half of 2019, but it is slowing down in H2 and is expected to reach 851mt in full-year 2019. Consumption of merchant bars has grown the fastest of any long product, followed by rebar. Wire rod use will stay flat for the first time in many years, mainly due to the problems in the EU automotive sector, Marti observed.
Rebar consumption in H1 was around 200mt – the largest tonnage in ten years – with Asia taking a 69% share. “The next Irepas will probably have to move to Asia,” Marti joked at the meeting attended by Kallanish.
The downturn in the Turkish market and global trade restrictions are pressuring longs prices, thereby squeezing mills’ rebar spreads, Marti observed. Scrap-rebar spreads now are comparable to 2009 and 2015 when they were in the $140s/tonne. The recent scrap price drop has eased this pressure slightly, he concluded.
