Low demand drags on long steel prices across Northern Europe but New Year could bring renewed activity, sources say

Minimal restocking activity resulted in prices being pushed downward over the week to Wednesday October 2 in the Northern European long steel markets amid weak consumption by the construction sector, Fastmarkets has heard.

Sources in Germany reported persistent weak demand and little hope of a recovery in the near-term. But market participants in the Netherlands and Belgium reported orders for small tonnages and renewed hope of a pick-up in construction activity in the New Year, Fastmarkets heard.

Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, delivered Northern Europe, was €600-620 ($663-686) per tonne on Wednesday, down week on week by €25-30 per tonne from €630-645 per tonne.

Depressed demand and high feedstock costs continued to weigh on trading activity, with the German steel sector particularly affected by minimal appetite among key end-user sectors.

“Demand is still very poor. Some orders [have been received but] not large volumes. Germany is in a very bad situation, in terms of demand,” a buyer source said.

Steel scrap prices have increased week on week, which has put further pressure on producers’ margins, market sources said.

The upturn in scrap prices was largely supported by a strengthening Chinese market, according to market sources. Sentiment in the steel market improved following the Chinese government’s recent stimulus efforts, prompting an increase in iron ore and steel prices.

Fastmarkets’ daily index for iron ore 62% Fe fines, cfr Qingdao, was $108.18 per tonne on Wednesday, compared with $96.07 per tonne on September 25. It rose further on Thursday, to $108.75 per tonne.

Fastmarkets’ calculation of its daily index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey, was $373.32 per tonne on Wednesday, up by $13.32 per tonne week on week.

The removal of the National Rural Area Programme (NLPG) in the Netherlands will help to stimulate the construction sector, and support the restarting of delayed projects, market sources said.

The NPLG was initiated by the country’s previous government as part of its stringent environmental regulatory program. It was designed to encourage the country’s provinces to meet environmental targets, including the cutting of nitrogen emissions.

This resulted in many construction projects, viewed as key emitters of nitrogen, being cancelled or postponed, market sources said.

The previous government made it more difficult to get construction permits, in turn limiting developers and reducing investment in the sector.

But the new, recently formed coalition government’s removal of the NPLG will help to remove these barriers and support construction activity, market sources said.

The NPLG will be replaced with a different program, the new government said, but it has made it clear that economic concerns will be given priority over stringent environmental regulations, market sources said.

“The new coalition government has put in place new regulations around nitrogen taxes and construction licenses which will help to support new construction activity,” a trader source from the region said. “In the Netherlands, we really need housing, and the government has said that it will build houses and will help to support the construction sector. We will start to see the results of these decisions after the [year-end] holidays.”

Fastmarkets’ weekly price assessment for steel wire rod (mesh quality), domestic, delivered Northern Europe, was €600-620 per tonne, down week on week by €5-10 per tonne from €605-630 per tonne.

Published by: India-Inés Levy

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