European wire rod buyers are increasingly alarmed by poor downstream order books, with the slump in demand stretching across several months and, in some cases, years, sources tell Kallanish.
Buyers say the structural erosion of the manufacturing sector is being overlooked by policymakers. The European Commission’s focus, sources suggest, appears oriented toward strengthening producer protection, mirroring US trade policy. Despite existing European tariffs, sales volumes of wire rod and downstream derivatives show no recovery signs, with buyers describing the market environment as distorted by market protectionism.
Some European producers acknowledge that volumes remain thin and that further price increases are difficult to sustain.
Exports within Europe are being used to compensate for weak domestic demand. Sales toward Eastern European markets, traditionally supplied from Asia, are being concluded at prices often significantly below those in western and northern Europe to shift volumes.
One southern European processor is reporting a 30% year-on-year decline in volumes during June and as much as 50% compared to May. A northern European processor reports a similar picture. He describes a slow but steady erosion in volumes over recent years.
This has seen EU capacity rationalisation, with Riva’s Belgian plant, Thy-Marcinelle, reducing production steadily for several years and is now in the process of closing altogether.
The crisis is now structural for the German manufacturing sector. “On the global scale we have lost competitiveness. On the export side the products we manufacture are no longer superior. On the import side, finished products from Asia come at a fraction of our price. They have the technology, and they don’t have the bureaucratic complexities of Europe,” a source says. They add that European bureaucracy has made producing in the region overly expensive and complicated.
“You protect the mills and they increase prices because costs are too high, but you don’t have customers and the entire value chain is suffering,” the source adds.
As in southern Europe, order intake in the north is weak, with companies increasingly focused on shipping previously sold material rather than securing new business.
Market participants see no reversal of the current European trajectory, with sources saying the old industrial model is no longer viable. “We need a new model; we need to simplify things and protect our industry,” one source argues.
The automotive, white goods, kitchen equipment sectors are all scaling back on orders in June, due to elevated prices and high stock levels due to sluggish consumption further down the chain.
“Manufacturing activity downstream is seriously concerning but nobody is talking about it and there are no ideas for a solution. Today we need a significant price reduction to rebalance the market but even with a €70-80/tonne [$80.9-92.4/t] reduction, consumption will not resume,” a wire rod buyer says.
“Demand is stranded because there is a general reduction of the manufacturing sector in Europe and protectionism has never been the answer. In Europe we are not self-sufficient in energy or technology. Closing our borders and increasing prices is not bringing any results,” the source adds.
Drawing quality wire rod prices are currently between €700-730/t delivered in Europe.
An Italian buyer says prices are not moving because buying has effectively stalled.
Sources anticipate further consolidation and capacity optimisation across Europe in the coming years as the manufacturing base continues to age, consumption contracts and export competitiveness deteriorates.
