Steel rebar prices in Italy, Spain stable on maintenance closures, weak demand

Decreasing demand and seasonal steel mill closures resulted in negligible activity in the steel rebar market in Southern Europe in the week to Wednesday August 3, with prices unchanged week-on-week.
Potential rises in energy costs in the fourth quarter continued to create uncertainty among market participants.

Demand picked up in mid-July, with buyers stocking up small volumes before the August summer holidays, but this activity has since reduced with mills closing for the low season, Fastmarkets heard.

Fastmarkets’ price assessment for steel reinforcing bar (rebar), domestic, exw Italy, was €860-910 ($875-925) per tonne on Wednesday, unchanged week-on-week.

Mills closing for August and sluggish demand resulted in the dearth of trading activity.

One source said that while prices were likely to remain the same throughout August, potential energy cost rises in September could drive up prices sharply.

Some mills, one source said, were selling rebar at prices €30-70 per tonne below the offer price so that they could sell as much as possible before closing for August.

“Producers are telling customers that energy costs will be out of control in September,” the same source said, “so they are warning customers that steel prices will be more expensive at the re-opening.”

Energy rationing, as proposed by the European Commission on July 20, could push up energy prices if it were to go ahead.

Emergency legislation, designed to protect countries from the possibility of Russia using its control of gas supplies to exert political pressure over the coming months, would enable the European Commission to impose 15% binding gas consumption restrictions on EU countries over the next two years.

This legislation, however, was a long way from being passed, and many countries within the EU opposed it. Energy rationing would be a response to Russia cutting off gas supplies, but there was no evidence yet that this would happen.

If such legislation were passed, this would create upward pressure on the price of energy, in turn forcing mills to increase prices, Fastmarkets heard. Some mills had considered extending production cuts into September to manage any upward surge in energy prices, sources said.

Mills’ maintenance closures and weak demand meant that there was scant trading activity for rebar in Spain, Fastmarkets heard.

Fastmarkets’ price assessment for steel reinforcing bar (rebar), domestic, delivered Spain, was €780-810 per tonne on Wednesday, unchanged week-on-week.

Despite demand increasing in July when customers re-stocked before maintenance stoppages, market activity has since dropped, Fastmarkets heard.

Spanish mills started to raise their prices toward the end of July to compensate for increasing energy costs, sources told Fastmarkets. But with mills closing for the low season, prices were likely to remain stable until September, they said.

Falling international scrap costs since mid-April have been a factor in the decline in the rebar market. Scrap prices jumped in early July but have since corrected.

Fastmarkets’ daily calculation of the index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey, was $351.19 per tonne on August 3, unchanged over the past week.

Published by: India-Inés Levy