A degree of positivity emerged in the market in the middle of June, as the prospect of an end to the Islamic fasting month of Ramadan brought hopes for Algeria-bound activity to revive.
The North African country has been a key market for finished long steel products from Southern Europe, but it has not yet announced import quotas or issued import licences for 2017.
Ramadan ended on June 24, and import licences for rebar and wire rod in Algeria are widely expected by market participants to be issued in July.
“There were rumours that some traders, who sold their [positions destined for Algeria] to Turkey and Cyprus, will now step back from those contracts and [will again] sell to Algeria as the licences are coming,” an international trader said in the second half of June.
With Algeria-bound trade at a standstill so far this year, EU-based exporters have been looking for alternative markets, as well as selling more tonnages within the union.
Metal Bulletin’s weekly price assessment for Southern European export rebar widened upward by €10 ($11) per tonne to €380-400 ($432-454) per tonne fob main ports on Wednesday June 28, from €380-390 ($432-443) per tonne on June 14.
Some offers have come in at €400-410 ($454-466) per tonne fob recently, but mills were mostly hesitant to announce prices amid the uncertainty around the issuing of Algerian licences.
“There have been rumours of some licences being delivered but [there has been no real activity] so far,” one Italy-based trading source said on June 28.
“The only result I can see among the producers is that this market has lost a lot in terms of credibility,” he added. “Now, all the mills are sceptical about quoting for Algeria unless there is a licence.”
EU domestic prices
In the EU domestic market, rebar prices also rebounded with Metal Bulletin’s latest assessments at €400-410 ($454-466) per tonne delivered in Southern Europe and €450-455 ($511-517) per tonne delivered in Northern Europe.
Meanwhile, domestic ferrous scrap prices dropped in Italy by €5-10 ($6-11) per tonne month-on-month in June, and by €10-20 ($11-23) per tonne in Germany over the same period. This created some space for producers’ margins, because with the rebound of international scrap prices after Ramadan long steel producers now have even more support for a rise in rebar and wire rod prices.
Metal Bulletin’s daily index for Northern Europe-origin scrap closed the day on June 28 at $279.29 per tonne cfr Turkey, up by $3.20 per tonne day-on-day.
However, as demand across Europe remains moderate, and Algeria is working toward adding to its own long steel production capacities, any price rises would have limited support.
Long steel prices can only tolerate a cost-driven increase if scrap prices rise, as demand remains subdued, according to international rebar exporters’ association Irepas.
The EU market for finished long steel products has been looking up recently amid expectations that Algerian buyers will return to active trading.