Following an increase in the cost of size extras on rebar products, German observers say that such surcharges are an attempt to end the lull of market prices in which some mills cannot be profitable.
The deterioration of base prices found a rest at around €350/tonne ($407/t) by July, and has since remained at around that mark, with only little success for mills to charge much more.
For the first time in ten years, two rebar mills in Germany and Austria recently announced an increase of their size extras that are the fixed price component, in combination with a base price that is subject to the market.
The previous size extra for the standard thickness of 12mm was €265/t. This would bring the low end of the final delivered price to €615/t. In the new lists, that surcharge is now €280/t, making a delivered price of €630/t.
The size extras vary by thickness from €270/t for 22mm to as much as €350/t for 6mm.
According to a buyer in central Germany, the new pricing brings a shift in the ratio, bringing the extras for bar and coil now closer, but could not explain the logic behind such a move.
A manager at a distributor in eastern Germany agrees that the system of size extras is not necessarily understood at distributors. He sees the adjustment of size extras as a tool to bring up the final delivered prices somewhat.
“Mills are having a hard time bringing up the base price, there is too much competition from imports,” one manager tells Kallanish. “So now they try to support prices via the size extras.”
Downstream, too, benders are banking more on surcharges to break even, the manager says. Benders are charging extra for some services, for example for stirrup bending or for “positioning” – labelling bars according to the position in the construction – he explains. “The competition among benders for construction jobs is fierce, he notes. Via the surcharges, they have some way of making the €70/t on top of the steel intake price they need to break even, he says.
Christian Koehl Germany
