Italian merchant bar producers are pushing up prices by a further €30/tonne ($35.29/t) this week in an effort to cover elevated costs and high scrap prices. This is the latest in a series of successive increases between March and April, Kallanish hears.
The move is being met with resistance from buyers and agents. Several sources say they are “confused” by the pace of increases, arguing that hikes have come too quickly without giving the market time to absorb them or see whether they can be passed on downstream.
This is happening against a backdrop of weak economic conditions and subdued consumption, with buyers saying they can no longer afford to purchase the same volumes as in previous months at current price levels.
Sources describe a fractured market, with producers displaying an optimism increasingly disconnected from reality while the downstream sector grapples with low demand, financial issues, payment defaults and delays.
Domestic merchant bar prices have risen significantly against pre-conflict levels. Current contracts for merchant bar are heard at €330-355/t base ex-works, equivalent to €750-775/t including size extras. Mills are now asking €370-375/t base ex-works, the same levels as the large distributors.
“Officially prices are increasing but how long can producer continue to sell a few truckloads at higher prices? Downstream we cannot afford high prices; the market is not there to absorb this. Soon we will see the impact of this downstream,” a source argues.
One agent says he has been selling at increased prices sensibly for lower volumes, which is about a third of what he sold before prices started to climb at the beginning of March.
Section prices meanwhile are increasing gradually as the market leader implemented a hike of €30/t before the Tube and Wire trade show with new levels at €830/t. The first category of sections is now at €800-820/t delivered on average. However, some levels of below €800/t from stock are heard.
Rising transport costs are emerging as a further pressure point in the market. Multiple truck drivers are reportedly refusing to load and transport material at current fuel prices, which have risen sharply in the context of the Middle East conflict. Drivers say they are awaiting a government decree expected to provide relief on fuel costs.
