Seasonal steel mill closures resulted in minimal activity in the rebar market in Southern Europe in the week to Wednesday August 17, sources told Fastmarkets.
In Italy, local mills had increased their offer prices prior to the August maintenance closures. Buyers, forecasting surges in prices heading into the fourth quarter because of the energy crisis, have accepted these higher levels, sources added.
As a result, Fastmarkets has adjusted its price assessment for Italian rebar upward.
Italy
Rebar demand in Italy had picked up in mid-July, with buyers stocking up small volumes ahead of the August summer holidays. But activity dropped off over the summer season. Despite this, local mills have maintained high prices because buyers expect prices to move upward in September, Fastmarkets heard.
Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar) domestic, exw Italy, was €860-934 ($875-950) per tonne on Wednesday, widening upward by €24 per tonne from €860-910 per tonne on August 10.
While prices are likely to remain stable throughout August, potential energy costs heading into the fourth quarter could sharply drive up prices, market sources told Fastmarkets.
Energy rationing, as proposed by the European Commission on July 20, could push up energy prices.
On August 5 the European Commission approved a plan, encouraging EU countries to voluntarily reduce gas consumption by at least 15% between August 2022 and March 2023.
While there is no evidence that countries will self-impose energy restrictions, if this did happen, energy prices would rise. This in turn would force mills to increase prices, Fastmarkets heard.
With a potential global recession on the horizon, consumption levels heading into the next quarter remains uncertain. If the economy constricts, end-user demand could drop off across several key segments.
If demand drops but input costs surge, mills may be forced to extend production cuts considerably, market sources said.
Spain
Mill maintenance closures resulted in minimal activity in the Spanish rebar market this past week, Fastmarkets heard.
Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, delivered, Spain, was €780-810 per tonne on Wednesday, unchanged since July 27.
In July, demand increased as buyers re-stocked before the summer season. However, market activity has since dropped, sources told Fastmarkets.
Prices are likely to remain stable until September, sources added.
Sliding international scrap costs since mid-April have also affected the price direction of rebar. After jumping in early July, scrap prices had retreated by the second half of July. In early August, they started to rise again.
Fastmarkets’ daily calculation of the index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey, was $394.07 per tonne on Wednesday, up from $387.81 per tonne on August 10.
Published by: India-Inés Levy
