Insight: EU rebar trips on weak scrap, hesitant buyers

Prices for European rebar weakened over the past week amid lower monthly EU scrap settlements and hesitant buying activity from end-users.

Platts TSI Northwest Europe Rebar assessment was Eur480.50/mt ex-works Friday, down Eur1.50/mt week on week from Eur482/mt ex-works on September 6.

The assessment has fallen Eur11.50/mt over the past two weeks.

A transaction was heard at around Eur495/mt delivered in the Benelux, while offers were heard at Eur495-Eur500/mt delivered Benelux. Tradable values were also heard at Eur495-Eur500/mt delivered, according to a distributor.

“Buyers are now waiting as they expect further price falls, and demand is weak as some construction projects may be stopped because of new government rules [on nitrogen emissions],” a seller in the Netherlands said.

A deal for 10,000 mt was also heard at a price of Eur485/mt delivered Germany, according to a selling source.

“We are moving down [our] prices, but buyers are waiting to see where the scrap price settles – not all scrap deals have been completed yet,” a Northern European mill source said Thursday. “There was some buying activity last week, but now it’s all gone. We’re currently offering at Eur500/mt delivered, but we don’t know where the price will pan out, it could go below Eur500/mt for sure.”

S&P Global Platts assessed Northern European domestic shredded scrap at Eur225-Eur230/mt delivered for September, down sharply from Eur250-Eur255/mt delivered in August. In Southern Europe, domestic shredded scrap was assessed at Eur240-Eur245/mt delivered for September, down sharply from Eur265-Eur270/mt delivered in August.

Platts’ Steel Rebar FOB Southern Europe assessment was Eur400-Eur410/mt FOB on Friday, compared with Eur420-Eur430/mt FOB a week earlier.

An Italian mill offer was heard at Eur405/mt FOB, and another offer was heard Eur400/mt FOB Greece, according to a trading source. A tradable value was heard at Eur410/mt FOB Italy, according to a mill source.

“There are no real bids or serious intentions to buy, and I doubt an Italian mill can sell at Eur405/mt FOB. The conversion margin for scrap to rebar can be up to Eur200/mt depending on the mill, so it would be very difficult,” an Italian mill source said, adding that the near-exhaustion of Turkey’s annual rebar allotment in the EU import quotas is unlikely to provide support to domestic European prices in the near-term.

“At the moment, nobody cares about safeguard quotas. The stocks of Romanian and Bulgarian importers of Turkish rebar are full now,” he said.

Only 9.7%, or 29,287.94 mt, remains of Turkey’s annual quota. The latest allocation to the quota was made Thursday, with a further 2,565.69 mt awaiting allocation as of Friday.

European buyers now have to provide a 25% financial guarantee on any orders as the quota has fallen below 10%. If a buyer’s cargo cannot be allocated to the quota because the quota has been exhausted, then the buyer will have to pay a 25% duty on the imported rebar.

Other producer sources were attempting to maintain higher price levels despite the negative sentiment in the market.

“We haven’t dropped offers as much [as the Italians], as we are trying to resist the negative movement. Scrap is going down because of Turkey and their inability to sell rebar, whereas there is still demand – relatively – in Europe,” a Spanish mill source said.

— Viral Shah