EU wire rod buyers worry over tight supply due to limitations on imports

The import market for long steel products brought into the EU was already under strain because of the safeguard measures the bloc has imposed, but the sanctions against Russia and Belarus for their war against Ukraine have aggravated the situation, sources told Fastmarkets on Wednesday April 20. One result was that steel wire rod buyers have become increasingly concerned about the availability of supplies.

Missing volumes
Russia and Belarus were given no new safeguard import quota volumes for the second quarter of 2022 due to the EU sanctions on those two countries in response to the war being waged against Ukraine.

“In each product category where Belarus and Russia had country-specific tariff rate quotas, the [European] Commission proportionally redistributed those volumes among other exporting countries, subject to the safeguard measure based on the most recent data available, namely their share of overall imports in 2021,” the Commission said.

To establish the level of overall imports, the Commission did not take into account the volumes from Belarus and Russia, or the import volumes from countries currently excluded from the measure. Including them would have had the effect of reducing the proportion attributable to all other countries, rendering the exercise ineffective.

Ukrainian mills were also out of the export market because Russia was blocking all the country’s key ports on the Black and Azov Seas. ArcelorMittal Kryvyi Rih, however, was preparing to restart production gradually and was looking for opportunities to resume exports by overland routes, as Fastmarkets has reported.

For now, however, the producer was still not able to deliver old orders, several sources said.

In 2021, Belarus exported to the EU 225,658 tonnes of wire rod, Russia 330,974 tonnes, and Ukraine 194,785 tonnes, according to data from regional industry association Eurofer. Altogether, these three countries supplied 751,417 tonnes to the EU last year.

“Europe is missing [wire rod] volumes. Ukraine is gone [from the market], Russia is gone, Belarus is gone. The Turkish wire rod quota [for imports into the EU] was filled in a couple of days [after it was renewed at the start of this month]. This is a disaster,” another buyer said.

European buyers were seeking alternative suppliers, booking cargoes from countres that did not have individual quotas, such as India, Egypt and Algeria.

The latest import wire rod offers from these three countries to the region, for delivery in July, were reported at €980-1,050 ($1,057-1,133) per tonne cfr, sources said.

Even though those prices were considered competitive, sources said that the long lead times were limiting buying interest.

“The ‘other countries’ quota [for wire rod imports in the second quarter] is full less than a month after the new quota period began [on April 1]. The Turkish quota was full in two days. Booking [wire rod] for July delivery is [risky],” a buyer in Germany said.

Meanwhile, the 111,148 tonnes of the ‘other countries’ quota for wire rod was fully used up by April 19, European Commission data showed.

Domestic supply, prices
Domestic wire rod prices in Northern Europe have been stable at high levels since early April, gaining strength from good demand and limited supply.

Fastmarkets’ weekly price assessment for steel wire rod (mesh quality), domestic, delivered Northern Europe, was unchanged at €1,300-1,350 per tonne on April 20. This was an all-time high in Fastmarkets’ data, beating the previous record of €900-930 per tonne set on August 18, 2021.

Producers in the region were also limiting their sales, offering quick delivery amid high levels of volatility in the market and high costs of production.

“All producers in Europe are controlling their sales. Raw material prices are enormous and it is in short supply, so we should be careful with stocks,” a mill source in Northern Europe said.

Producers in the region were running at 50-60% capacity “in a best-case scenario,” market sources told Fastmarkets.

Other sources expected that the price uptrend in the region could resume late in May due to high mill costs and short supply of material. Some sources suggested that wire rod prices in the region could go as high as €1,400-1,500 per tonne delivered.

Published by: Julia Bolotova