Price rises expected in Northern European rebar market

Current price levels in the Northern European rebar market are not considered workable by producers, Fastmarkets heard.
Rising input costs and stable consumption levels have resulted in depressed prices no longer reflecting market realities, sources said.

Aside from the private housing sector, demand from public and industrial construction projects was reported as stable.

Negative sentiment regarding a recession and overcapacity among cut and benders has put pressure on prices, but the bearish outlook has not been reflective of underlying consumption levels which are relatively robust, sources said.

Mills are unlikely to accept further price drops, because it would bring prices below the cost line, sources said.

Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, delivered Northern Europe was €710-730 ($762-784) per tonne on Wednesday February 15, up by €20 per tonne from €690-710 per tonne week on week.

Market activity remained quiet in the Northern European rebar market in the week to February 15, because buyers restocked in January.

Despite weak demand, underlying consumption from public and industrial projects remained robust, sources said.

“The market is very quiet at the moment. Such a quiet market is unusual for this time of year, especially as the weather is good,” one buyer source from Germany said.

The buyer source, however, maintained that demand was stable.

“Demand, aside from in the private housing sector, is stable in Northern Europe,” the source said. “For whatever reason, be it negative sentiment or overcapacity among cut and benders, prices are unworkably low. Cut and benders are speculating on further reductions, which are not going to happen. Mills cannot drop prices further but also have minimal leverage.”

Future price rises are expected, Fastmarkets heard.

“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.”

The impact of a recession on the construction industry has been overstated, sources said, with bearish sentiment remains unreflective of current market situation. This opinion was similarly stated in 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,” IREPAS said in the outlook.

“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 what the impact the earthquake in Turkey will have on the market.

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

“We are waiting to get a better understanding of how this could impact the market, but it will likely reduce Turkish imports of long products into Europe,” the source added.

International scrap prices, which have been rising since December 2022, affect the price of all long steel products. Prices have fallen in the week to February 15.

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, from $418.62 per tonne last week.

Published by: India-Inés Levy