Observers of the German reinforcing steel market warn that a prevailing supply bottleneck could be aggravated by a shortage of transportation capacity and high water levels.
This would mostly affect material made of wire rod, like wire mesh, rebar in coil and also certain sizes of straightened rebar, Kallanish hears from one distributor. Shortages have prevailed for some time, partly because of high demand and partly due to the notorious shortage of wire rod on the European market.
This trend could deteriorate in view of the high water on German rivers, he fears. “Scrap and wire rod, to a large extent, are forwarded on waterways, and we can already feel bottlenecks from it,” he writes in a note to customers.
He also points to the impact from overseas transports, because freight costs have surged as a consequence of the demand boom in Asia. “Wire rod processing works have communicated that a lack of incoming tonnages is forcing them to stretch delivery times for rebar coils and mesh. Also, they are signalling that they won’t take new orders which maybe cannot be fulfilled because of that insecurity,” he says.
According to various sources, the base price for rebar is at or above €400/tonne ($482), with wire mesh normally €100 more; but an ongoing shortage could widen that spread. Benders are already under massive cost pressure now that they must pay €200 more for rebar than in November still. “They are certainly not rejoicing over the contracts they have signed with construction firms for the year before that surge came,” a Ruhr-based manager says.