Protectionism reshaping Mediterranean rebar flows

Mediterranean rebar trade flows have experienced significant changes in recent years because of trade restrictions and demand fluctuations.

One of the region’s largest rebar exporters, Turkey, had to redirect volumes historically sold into the US and EU to other destinations, presenting an opportunity for other suppliers.

Turkish rebar exports to the US dropped to just 73,219t last year from 344,716t in 2018 and 782,698t in 2017, because of the Section 232 duty — President Donald Trump doubled the duty on Turkey to 50pc in August 2018, before relaxing it to 25pc last year.

The drop in US rebar imports last year was nowhere near as big as the drop in Turkish volumes — overall rebar imports slid by just 85,857t to 1.06mn t. European suppliers benefited from the 50pc Turkish duty. Spanish shipments into the world’s largest steel import market jumped to 236,703t last year from 68,903t in 2018. A slowdown in domestic Spanish demand during political uncertainty saw mills seek new markets. The lack of a stable government in Spain has put a brake on new construction projects.

Italian bar shipments to the US fell by 73,977t to 152,907t last year. Overall export shipments declined to 1.5mn t last year from 1.74mn t in 2018.

Protectionism and demand dynamics saw Turkish rebar shipments drop by 251,216t last year to 5.94mn t. Yemen has become the largest buyer of Turkish rebar, highlighting the difficulties and fragmentation facing what was a benchmark price from the world’s leading exporter. Shipments to Singapore and Israel jumped — Turkish mills have benefited in recent years from the comparative strength in Chinese prices, and its pullback from export markets.

Turkish rebar-in-coil shipments have increased in recent years — to 639,468t last year from 488,566t in 2018 and 379,577t in 2017. Coiled bar is attractive for markets where labour costs are higher. “Coil is mostly an automated process — they can load a coil, set the machines to bend to whatever shape you need and leave the machine to do the job,”, a European trader told Argus.

Some importers have raised purchases of rebar in coils proportionally with rebar or in some cases more significantly — around 50pc over two years in Singapore and Israel.

For EU customers, quality apart from the quota system remains an important factor, limiting them in import opportunities to a few regional suppliers. Western European countries such as Germany, which has the highest rebar in coils share of around 50pc of total rebar consumption, often adjust their machines for material from a particular supplier.

Shares of rebar in coil of total rebar consumption in other countries amount to 5-25pc, although price is the primary factor in purchasers’ decision-making. “Automatic processing of material is increasing. But in our business the material price is the main driver,” a European producer said. If rebar is much cheaper than rebar in coil, which is usually in line with wire rod levels, customers will buy rebar, he said. With a shortage of import opportunities, many European mills have increased premiums for wire rod.

While Turkish scrap prices have jumped rapidly in the past week — the Argus daily assessment has risen by $31.50/t since 5 February to $279.50/t today — European mills achieved lower scrap settlements for February and made further concessions. This encouraged EU suppliers to focus on the North American market again and start negotiations with US and Canadian customers.

Some Italian and Algerian volumes have been booked recently, market participants said, although this was not confirmed and negotiations are continuing. A Turkish mill sold at around $600/t cfr including duties and tariffs into the US in the past 10 days or so.

By Elena Grebiniuk