German road toll weighs on rebar players

Germany is seeing truck toll rates increase from 1 December, which is worrying downstream players in the rebar market, which typically has short-haul delivery routes.

According to a manager at a cut-and-bend group, the higher rates will result in the doubling of road fees, which could mean at least €20 ($22) extra for a conventional truck load. The increase is being introduced as a compensation for CO2 emissions, but does not take into account the environmental performance of different vehicle models, he remarks, critically.

“New models are usually exempt when such fees become stricter, but not this time,” he says.

This comes “at the worst time,” as the rebar business is already suspended in a flat-out construction market, he tells Kallanish. “Builders keep holding back orders from benders. They make inquiries, but then prefer to wait for more price discounts, and this just drags on. But we benders cannot go lower; intake prices and sales prices are already totally out of proportion.”

A buyer at a hardware store confirms the mismatch of prices upstream and downstream. Mills last month lifted prices, “but nobody will pay them because our sales prices would not bring the cash back,” he notes. He confirms one purchase he made to fill a short-notice order, at the elevated base price of €350/tonne ($384), translating to €615/t delivered. But he predicts that once the current order backlog is worked down by mills, they might have to revert to the previous base price level of €320, maybe lower, rather than fetching the €370 they are seeking.

“Of course, mills are trying to keep up their prices because they have rising costs,” he states with a view on the high power prices in Germany. However, “they were moaning to us about energy costs even in spring last year when they sold for more than €1,000/t, and thus have since lost their credibility,” he adds.

From a recent query to Italy, he has learned that Italian mills are not taking orders from Germany because it pays better for them to sell elsewhere. “Germany is considered the weakest market for rebar mills,” he notes.

Christian Koehl Germany