Poor end-user consumption, pessimistic outlook blight Northern Europe rebar market

A pessimistic outlook has taken hold in the Northern European rebar market, with weak demand and tumbling prices adding to the downbeat mood, sources told Fastmarkets on Wednesday October 12.
Despite producers offering significant discounts, buyers remained in a wait-and-see mode.

Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, delivered Northern Europe, was €930-995 ($902-965) per tonne on Wednesday down by €10-20 from €950-1005 last week.

Postponed construction projects and uncertainty regarding future price direction resulted in few transactions in the Northern European rebar market.

High energy costs resulted in mills raising their long steel offers following summer closures. But weak demand has made those prices unacceptable.

“Very little has changed since last week,” a buyer source told Fastmarkets. “Demand remains poor and customers remain in wait-and-see mode.”

While some producers are trying to maintain stable prices by referencing higher scrap prices in Turkey, others are offering unviable discounts, Fastmarkets understands.

Over the past fortnight, energy costs have dropped, sources said, so buyers expect prices to fall, but producers are already close to breakeven and are concerned that energy costs might rise again toward the end of the fourth quarter.

“Overall sentiment is weak and demand is not great. Buyers expect prices to continue going down but we cannot go down any further. If we drop prices, we will no longer [be able to] continue producing [rebar],” a producer source said.

“Energy prices are going down but the forecast for November and December looks high so we cannot drop prices,” the source added. “With ongoing uncertainty [continuing over Russia’s unprovoked invasion of Ukraine], we cannot take the risk.”

Sluggish demand is not cost-driven, sources told Fastmarkets, adding that downward pressure on prices from producers undercutting each other was not necessarily likely to stimulate trading activity.

Some producers have, therefore, stopped dropping their prices and have said the will only issue official offers when demand improves.

International scrap prices have an impact on all long steel product prices and increased through early October.

They have since stabilized, however, and Fastmarkets’ calculation of the daily index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey, was €362.41 per tonne on October 12, slightly down from $365.38 per tonne a week earlier.

Published by: India-Inés Levy