Northern European wire rod prices not workable, producers say

The Northern European wire rod market was quiet in the week to Wednesday February 15 after most buyers chose to restock in January, Fastmarkets heard.
Sources said there’s no logic in prices continuing to fall because input costs for iron ore and scrap have been rising and underlying consumption from the construction industry has been relatively stable.

Market participants forecast a future downtrend reversal across long products in Northern Europe.

Fastmarkets’ weekly price assessment for steel wire rod (mesh quality), domestic, delivered Northern Europe was €710-725 ($762-779) per tonne on Wednesday, narrowing upward by €30 per tonne from €680-725 per tonne week on week.

Mills are likely to resist any further downtrend in the Northern European wire rod market, sources said.

Despite cut and benders offering unworkably low prices to end-users and attempting to restock at similar price levels, mills will not offer further discounts, sources said.

Consumption levels from public and industrial projects remain robust and fears regarding a worsening recession have been overstated, sources said.

“Domestic prices will go up,” a producer source said. “At the moment, we are not working with a realistic or workable price. Iron ore and scrap prices are going up so there is no reason why prices are so depressed.”

“Demand, aside from in the private housing sector, is stable in Northern Europe,” a buyer source from Germany said. “For whatever reason, be it negative sentiment or overcapacity among cut and benders, prices are unworkably low.”

The impact of a recession on the construction industry has been overstated, sources said, with bearish sentiment unreflective of the current market situation. This opinion was similarly stated in the the International Rebar Producers & Exporters Association’s (IREPAS) short-term outlook.

“It seems that customers heard too much talk of recession last year and were convinced that all construction would stop in 2023,” the IREPAS outlook said.

“Actually it looks like Europe managed to avoid recession in 2022 and even in January, Germany showed economic growth. Core inflation is going down and the situation looks much better than expected in Europe and the US,” the outlook added.

Sources remained uncertain regarding the impact of the earthquake in Turkey on the market.

“Attention is focused on Turkish steel mills. Logistical problems in terms of getting raw materials into mills have made production more difficult, in turn potentially limiting production capacity,” a second producer source said.

A reduction of Turkish imports into Europe could increase demand for domestic stock, sources said.

International scrap prices, which have been rising since December 2022, affect the price of all long steel products.

Fastmarkets’ daily calculation of the index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey was $410.79 per tonne on February 15, down from $418.62 per tonne last week.

Published by: India-Inés Levy