Italian merchant bar is seen increasing in new May contracts as producers are expected to raise prices again on the back of strong demand from other European markets.
Due to Liberty Steel’s financial troubles, European customers are not buying from its Ostrava mill, thereby taking large tonnages out of the European market. Like last month, Eastern European buyers are focusing on Italian and Spanish producers. Spanish producer Celsa has halted sales and is expected to also increase its prices this week.
In Italy, this would be the second price hike for merchant bar this month. Asking prices were already pushed up to €290/tonne ($349) base ex-works ten days ago. Italian producers are seen pushing their values to well over the level of €300/t base ex-works, Kallanish learns from market participants.
This week, transactions in Italy gained €10/t on average compared to last week. Contracts are at €250-260/t base ex-works. Including size extras, a workable price is €670-680/t base ex-works, sources suggest.
While southern European producers are enjoying high demand on the export market, domestic demand remains subdued as Italian distributors refuse to stock up at current prices. Purchases are only back-to-back and merchant bar stocks in Italy remain low. Margins for distributors are not always profitable.
March was a record month for merchant bar sales, agents say, adding that activity, particularly in the north, remains high this month.
Natalia Capra France
