Buyers accept higher rebar prices in Italy, Spain amid surging energy costs

Price ranges for steel rebar widened upward in Spain and Italy in the week ended Wednesday July 27. Energy cost surges, combined with continuing uncertainty around potential energy shortages in the fourth quarter, have made customers more willing to accept higher prices, sources said. Increased demand, in part because of customers re-stocking before mills close for maintenance work over summer, contributed to buyers accepting the higher prices, thus reversing the price downtrend for rebar in Southern Europe.

Demand remained good in Italy, with some buyers stocking up before the summer holidays begin in August.

Fastmarkets’ price assessment for steel reinforcing bar (rebar), domestic, exw Italy, was €860-910 ($873-924) per tonne on Wednesday, widening upward by €30 per tonne from €860-880 per tonne the previous week.

Although demand was still solid, significant uncertainty remained, Fastmarkets heard.

“Buying is still good this week, but it’s going to decrease day-by-day,” one source said.

The same source, however, said that there was a chance that buyers would continue to re-stock before August closures, in order to avoid new price increases in September.

Potential energy cost rises continued to create uncertainty and fear among mills.

“Rising energy costs will have a big effect on rebar prices,” one market participant told Fastmarkets. “Producers are worried about gas and energy prices in September.”

With that persistent uncertainty, mills were unwilling to accept large-volume orders over longer time periods, Fastmarkets heard.

As a result of this, combined with relatively sluggish demand, some flat steel producers across Europe decided to cut production even more than they would in normal circumstances.

Arvedi in Cremona, for example, will pause all operations through August while Acciaierie d’Italia in Taranto has already paused one of its four blast furnaces, Fastmarket heard.

This reduced production may lead to cost increases across steel products, one source said.

The energy rationing measures proposed by the European Commission on July 20 would add further upward pressure to energy prices, forcing mills to increase prices and potentially cut production, sources told Fastmarkets.

Emergency legislation, intended to protect countries from the possibility of Russia using its control over gas supplies to exert political pressure over the coming months, would enable the European Commission to impose 15% binding gas consumption restrictions on EU countries over the next two years.

Buyers in Spain have become more accepting of price rises amid surging input costs, Fastmarkets heard.

Fastmarkets’ price assessment for steel reinforcing bar (rebar), domestic, delivered Spain, was €780-810 per tonne on Wednesday, widening upward by €10 per tonne from €780-800 per tonne the previous week.

Demand remained solid with customers re-stocking before maintenance stoppages, Fastmarkets heard.

Spanish mills have begun to raise their prices to compensate for increasing energy costs, sources also told Fastmarkets.

Falling international scrap costs since mid-April have been a major factor in the decline in the rebar market. Scrap prices jumped in early July but corrected in the week to July 27.

Fastmarkets’ daily calculation of the index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey, was $351.19 per tonne on July 27, down week-on-week from $382.50 per tonne.

Published by: India-Inés Levy