German rebar buyers are increasingly confident the price floor has been reached after the base price sunk to €330/tonne ($363) at the end of June.
“Apparently, a point has been reached at which the mills are not willing to follow the downtrend any longer. It will be risky to keep speculating on a further drop of prices,” one commentator of a central German distribution house writes in his blog.
Managers in southern Germany concur. “It would not make sense for mills to produce for less,” one says. “Mills want to go back up to €350/t and have set signals for it, with [output] reductions in the holidays and by means of short working hours,” another observes.
Sources in Germany and Austria told Kallanish earlier of such efforts to lift prices by some €20/t in order to achieve market stabilisation. One northern German source notes offers early this week were at €370/t for smaller orders, but adds that he himself has no reason to order at present.
In fact, the hike attempts might ultimately not be accepted in the market. “Any hike attempt this summer might be a short rebellion, but it will not gain lasting ground,” one German buyer finds. One Austrian is even more critical: “Mills have tried all year so far to bring up prices, but I see them softening still further,” he states, citing falling scrap values and demand not kicking in.
Christian Koehl Germany