EU sources expect long steel prices to climb in near term amid availability concerns

Most market participants expect long steel prices in Europe to rise in the near term amid availability concerns after the recent major earthquakes in Southeastern Turkey and Syria, sources told S&P Global Commodity Insights.

“Unfortunately, we are expecting long steel prices to move up in a few weeks’ time,” one European mill source told S&P Global, in the aftermath of the earthquakes in Turkey and Syria Feb. 6. “The flow of imports will definitely come down in the coming weeks, which will mean an improvement in prices.”

Turkish mills have been major exporters to European countries for long steel products like rebar and wire rod evident by the quick exhaustion of Turkish-imported long steel European safeguard quotas in the past.

Little demand for January-March quota period

For Turkish-origin rebar imports into Europe, the October-December 2022 quota of 90,857 mt was exhausted Oct. 1, 2022, while about 30% of 114,236 mt of October-December 2022 quota of Turkish-imported wire rods was transferred to the January-March safeguard quota period.

However, Turkish mills saw little demand for the January-March quota period from Europe. For the current quota period that started Jan. 1, 52,252 mt, or 58.8%, of a total of 88,881 mt of Turkish-origin rebar imports was still awaiting allocation at 6:30 pm London time Feb. 10.

Elsewhere, 138,982 mt, or about 95.6% of a total Turkish-origin wire rod quota of 145,329 mt, still remained as of 6:30 pm London time Feb. 10 for the January-March quota period.

A second European mill source indicated that quota was not fully booked from Turkey for the January-March quota period as weather conditions and high inventory levels over the past quarter impacted demand. The source also noted that competitive prices from Egypt and Algeria also affected demand for Turkish long steel products.

Platts, part of S&P Global Commodity Insights, assessed Turkish exported rebar at $670/mt FOB on Dec. 31, 2022, down from an intrayear high of $970/mt FOB reached March 24, 2022. Platts current assessment of Turkish exported rebar stood around $700/mt FOB on Feb. 10, as the market was mainly on hold amid the ongoing crisis.

Amid the recent earthquakes and ongoing crisis in the Southeastern part of Turkey, the European mill source noted that customers in the Mediterranean Sea region were inquiring about rebar amid concerns that some cargoes might not be able to be delivered from Turkey.

“Customers are more concerned if we have availability in case the material cannot come,” the source said.

“Prices in the European domestic market are currently stable for rebar,” the source said. “We were planning to increase prices after last week but since the situation in Turkey we are in a wait and see mode. One point of view is that scrap prices will be going down, but the other point of view is that there might be a lack of rebar in Europe,” he said, implying that limited availability of rebar might support higher prices.

Platts’ assessment of Northwest Europe Rebar decreased Eur5/mt to Eur710/mt ex-works week on week to Feb. 8, according to S&P Global data.

Domestic scrap prices expected to soften

“Prices might increase for finished steel products [in Europe], but we can see the full effects of it in a few weeks,” another European mill source said. “It is too early to tell, and there are other factors too, like other importers and scrap prices.”

“Because of the crisis … [the importers’] capacity to receive scrap in Turkey is going to be lower, which will mean more supply in Europe, which can lead to lower prices for scrap,” the source said. “So, we can have a better idea about the situation in a few weeks.”

Platts assessed Turkish imports of premium heavy melting scrap 1/2 (80:20) at $427.50/mt CFR Feb. 10, unchanged from Feb. 9.

Amid uncertainties regarding near-term scrap demand from Turkey, domestic ferrous scrap prices in Northern Europe softened in February, as mills resisted seller attempts for further hikes. In Northern Europe, Platts’ assessment for domestic shredded scrap was at Eur382.50/mt delivered to the mill Feb. 10, down Eur5/mt month on month. Platts’ assessment for Southern European shredded scrap was at Eur390/mt delivered to the mill Feb. 10, unchanged month on month.

One distributor source in the Benelux region said it was too early to deduce “what the real impact might be on imports or domestic prices in the region after the earthquake in Turkey.”

Meanwhile, Turkish steel mills in the impacted regions of the Feb. 6 earthquakes were aiming to restart production as soon as possible, as no serious damage was reported at most of them, the mills said Feb. 10.

— Rabia Arif