Europe longs: Tension mounts amid uncertainty

The European longs market has been quiet this week, as rising input costs forced most producers to pause trading, with many mills and buyers sitting on high inventory levels. The Argus weekly Italian rebar and drawing-quality wire rod assessments were flat at €865/t ex-works and €910/t delivered, respectively.

In Italy, some producers were withholding offers this week, with some already shut for the summer maintenance period, an Italian market participant said. Tradeable values for Italian rebar remained at €860-880/t ex-works, although offers rose to more than €900/t ex-works last week. Because of rising energy costs, supply is expected to be limited after the summer break and producers are expected to prioritise sales to higher-priced markets.

Rebar in coils from Italian mills was indicatively quoted at €1,000/t delivered and above to Germany and €900/t delivered to eastern European markets, but negotiations are expected to resume after the summer break. Meanwhile, German producers are pushing prices to around €950/t delivered domestically, or somewhat lower for other destinations. But trade has been muted for the past two weeks during summer holidays and traders have lower-cost inventory, which can be sold at lower levels should there be pockets of demand. “Demand will remain quiet for a few weeks until the holidays are over, but it is hard to make predictions for the rest of the year given uncertainty over gas supply,” said a German market participant. Rising energy costs could crimp demand while exerting upwards pressure on steel prices, which is why market participants are taking a cautious approach.

Rebar offers from local producers in Poland stood at 4,000-4,100 zloty/t (€835-855/t) delivered and similar levels were reported to nearby countries on delivered terms last week. Producers announced increases but no one will buy at such high prices, a Polish market participant said. Most distributors can replenish their stocks from the market because there is still a lot of cheaper material available from the stocks of big distributors, he added.

At the same time, most Italian producers preferred to stay out of the Balkan or other lower-priced markets, given their competitors were offering rebar at €760-770/t fob or around €800/t delivered there lately. Some southern European customers were looking to import from overseas suppliers amid a sharp drop in prices, with the Argus daily fob Turkey steel rebar assessment sliding by $55/t in the past week to $640/t fob on actual weight basis today amid limited demand and downward pressure from Asia.

Drawing-quality wire rod was quoted at €920-960/t delivered, but some producers were deemed to accept levels below € 900/t delivered for sizeable tonnages. Tunisian wire rod was heard on offer at €725/t fob, with bids coming €20/t lower. Algerian wire rod was available at $750/t fob last week. In the meantime, workable levels for Turkish wire rod fell below $700/t fob, with offers standing at more than $710/t fob.