Southern Europe rebar prices rise despite weak end-user consumption

Trading activity remained slow across Southern Europe in the week to Wednesday September 7.

Long and flat steel producers continued to reduce production to manage skyrocketing energy costs in the region.

Despite the slow market, mills have continued to target higher prices to pass on costs to consumers, Fastmarkets heard. Uncertainty about how high prices could go while demand remains very weak continued to plague the market.

Sources say government intervention may be the only recourse to cap energy costs and regulate prices in the region.

Mills in Italy have managed to raise prices since July to manage surging energy costs. While demand picked up in late August, it dropped off in early September, sources told Fastmarkets.

Fastmarkets’ price assessment for steel reinforcing bar (rebar) domestic, exw Italy was €975-1,020 ($968-1,012) per tonne on Wednesday, up by €35-45 per tonne from €940-975 per tonne a week earlier.

Rising prices combined with slow demand continued to create uncertainty among market participants.

Mills in Italy have been raising prices since July to manage energy costs. Mills will look to target new increases of €50 per tonne in the coming week, Fastmarkets heard.

Whether the market accepts this remains to be seen, especially considering demand is dropping.

One producer source in Italy told Fastmarkets: “This week, demand is not so good. Everyone bought last week before the price increase. Producers are worried about energy costs. Some mills say that if energy costs don’t decrease, it will become impossible to continue producing and to remain in the market.”

A buyer source in Italy said: “The market is quiet, but producers cannot accept lower prices due to the high costs of energy and gas. They have already announced there will be further increases this week.”

The potential impact of inflation, a long-term contraction of end-user consumption rates and high energy costs continued to weigh on market confidence.

A second mill source in Italy: “Mills are cutting their output. They don’t produce when energy costs are higher, but they don’t have a clear strategy for the future. They go on a day-by-day basis.”

In the Spanish rebar market, prices continued to rise despite slow demand as well, Fastmarkets heard.

Fastmarkets’ price assessment for steel reinforcing bar (rebar), domestic, delivered, Spain was €980-1,000 per tonne on Wednesday, up by €110-120 per tonne from €860-890 per tonne a week earlier.

Similar to other producers across Europe, Spanish mills are raising their prices to manage the energy crisis, sources told Fastmarkets.

Demand has remained sluggish, however.

A Spanish trader told Fastmarkets: “There are very few deals in the market because traders cannot pass on increases downstream. The construction industry simply will not accept these price rises.”

A buyer source said mills had no choice but to keep raising prices, regardless of demand.

If mills significantly cut production, demand for scrap could drop too. This in turn could result in domestic and international scrap prices falling.

While scrap prices rose in late August, they have been falling since early September.

Fastmarkets’ daily index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey was €363.16 per tonne on Wednesday, down by $30.32 per tonne from $393.48 per tonne a week earlier.

Published by: India-Inés Levy