EU LONG STEEL OUTLOOK: February prices expected to remain strong

Domestic offer prices from European steel mills are still supported by high production costs and strong demand from end-users.

Market participants expect domestic rebar prices in Northern Europe to remain strong in February, with Metal Bulletin’s latest assessment for rebar prices in the region at €560-580 ($696-721) per tonne delivered on January 31.

“Demand is good and the weather is relatively mild so construction sector demand remains strong,” one Northern European producer source said.

Metal Bulletin’s weekly price assessment of mesh-quality wire rod in both Northern and Southern Europe reached near six-year highs in late January.

These market fundamentals are expected to persist through the month of February, amid strong demand and tight supply.

Expectations for domestic rebar prices in Southern Europe were more moderate, however.

“I’d expect activity in February to be quite similar to that of January because the price is very high right now,” a Southern European producer source said.

One European trader said that there was “uncertainty in the market.”

Export prices for Southern European rebar were unchanged week-on-week at €490-505 per tonne fob amid continued low market activity.

Steel mills are resisting the temptation to lower their export prices in an attempt to kick-start trading, amid strong domestic demand.

“There is little activity but we cannot rush into the market and drop prices immediately,” a second Southern European steel producer source said.

“Export trading could restart if European mills decide to reduce their prices a little further,” a Southern European export trader said on January 24.

Regulatory uncertainty for Algerian rebar importers has also contributed to low export activity, but some traders expect Algerian rebar importers to return to the market during the second half of February.

European steel producers across the continent played down possible downward pressure from weakening ferrous scrap prices on finished long steel products.

Metal Bulletin’s daily index for Northern European HMS 1&2 (80:20) ferrous scrap closed at $340.67 per tonne cfr Turkey on February 1, down from $346.50 per tonne on January 25.

“It’s not really a decrease but a softening of the edges,” the second Southern European producer source said.