Northern European long steel market inhibited by weak demand from construction sector

Demand for long steel remained weak in Northern Europe in the week to Wednesday January 22, with no signs of improving interest from the region’s construction sector, sources told Fastmarkets.

But high energy prices mean mills in the region maintained their offer prices from the previous week, Fastmarkets understands.

Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, delivered Northern Europe, was €625-645 ($651-672) per tonne on Wednesday, widening week on week down by €15 per tonne from €640-645 per tonne on January 15.

Price increases established before the Christmas holidays have been maintained despite the weak demand, mainly because of ongoing high feedstock costs, sources said.

“These is ongoing poor demand, but we have had some inquiries and some [questions] about prices [and we] still have some running orders from last week,” one buyer source told Fastmarkets.

Deals were reported at around €625 per tonne while offers were reported at €635-645 per tonne. It remained unclear if the market would accept these higher offers.

“Energy costs are around 25% higher than they were last year, which is a big problem for the steel mills, especially with low demand,” the buyer source told Fastmarkets.

Sources in the Netherlands said they expected construction projects to pick up again in Spring, which could, in turn, stimulate buying activity.

“The government is talking about new construction projects being commissioned,” a trader source from the Netherlands said. “If it is true, we will see. Sentiment is better now we have a new government, that says it will prioritise building over environmental priorities.”

Import offers for rebar into Northern Europe were scarce due to weak demand and uncompetitive prices, sources said.

Scrap prices edged slightly higher, meanwhile, amid improved demand from Turkish mills for February deliveries due to improving steel sales in the country, sources told Fastmarkets.

Fastmarkets’ calculation of its daily index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey, was $334.58 per tonne on Wednesday, up from $332.34 per tonne week on week but down from $348.12 per tonne month on month.

Fastmarkets’ corresponding weekly price assessment for steel wire rod (mesh quality), domestic, delivered Northern Europe, was unchanged at €610-620 per tonne.

Wire rod import offers were reported at €590 per tonne for May delivery, but the appetite for imports was muted amid ongoing uncertainty regarding the current EU safeguard review.

“The last review from June 2024, which came into effect on July 1, 2024, caught a lot of [market participants] by surprise, so there is some risk aversion [now],” a wire rod producer source said.

Bleak outlook
The outlook for the European steel market remains bleak due to ongoing weak demand and negative growth in the region, combined with increasingly protectionist measures elsewhere, the International Rebar Producers and Exporters Association (IREPAS) said in its latest short-range outlook, published on January 15.

According to IREPAS, the EU is expected to announce a revision of protective measures on April 1.

Excess capacity from China has continued to put downward pressure on prices and, with increasing moves towards protectionism, heralded by the US, the short- or medium-term outlook was bleak, both in terms of prices or demand, the association said.

Published by: India-Inés Levy