Germany’s rebar mills over recent weeks have been able to maintain the base price level of around €400/t ($431) they had targeted as the lower end of an acceptable range in January.
“The price has held relatively steady, give or take some ten euros here and there,” a northern German buyer tells Kallanish. Maintaining the price level would be desirable, and he hopes the mills will be able to do so for the next weeks. March could bring the seasonal momentum of resurging construction activity, and thus further price stability, or even increase, he says.
Against that stands the overall decline in construction activity that kicked in in 2022/23. Once mills have worked down the deliveries booked since December, a hunger for new orders could drive them to again make price concessions.
While this scenario is not out of the question, another critical manager believes that mills are too skilled at the game to amke such concessions. “A basic lesson in business administration is the balance of fixed and variable costs. So when mills have little order volume, they will still have to distribute their input costs on the lower volumes, if they do not want to make a loss,” he says. He is sure that there will be no other option for mills if they want to cover their costs.
The alternative would be to sell below value to generate demand. But he is also sure that this will not work in the present environment of insufficient real demand. “The construction industry is living off the backlog in the books, especially residential construction,” he says.
Christian Koehl Germany
