EU LONG STEEL OUTLOOK: Cautious buying expected on weak demand

Rebar consumption is expected to rise with the weather improving through May and construction projects ramping up, but public holidays in several areas across Europe during the month could damp any possible increase in buying activity, while cheaper imports are putting pressure on the prices achieved by domestic mills.

“The market is starting to pick up but we have seen some import pressure, with rebar coming in from Turkey and also Spain. This might explain the recent slower buying activity at EU mills,” a distributor in Northern Europe said.

Metal Bulletin’s weekly price assessment for domestic rebar in Northern Europe was steady week on week at €540-560 ($666-691) per tonne delivered on May 9.

In comparison, Metal Bulletin’s latest weekly price assessment for rebar exports out of Turkey was unchanged over the week at $550-560 per tonne fob on May 10.

Import volumes of Turkey-origin rebar into the EU amounted to 143,000 tonnes in January-February 2018, up from 37,000 tonnes in the first two months of 2017, according to the latest official EU trade statistics.

Domestic rebar demand is likely to remain weak in Southern Europe over May, with Italian mills lowering their offer prices earlier in the month.

Southern European mills have been able to export some quantities of rebar to the United States in recent months, but demand from the Algerian market, traditionally the principal rebar export destination for Southern European mills, has remained low while the North African country makes the transition to self-sufficiency in the product.

In late April, US authorities postponed until June 1 the imposition of import tariffs on steel and aluminium from the EU, Canada and Mexico. The threatened 25% tariff on steel arises from the country’s Section 232 trade investigation.

Italian and Spanish mills were offering material into the US at prices in the range of €515-555 per tonne fob, with a difference emerging among exporters in terms of whether to add the 25% tariff to the price or not, sources claimed.

“It’s quiet, with very few bookings, but nobody is taking any chances with the market uncertainty surrounding [the] Section 232 [tariffs], and safeguarding investigations in both Europe and Turkey,” one European export trader said.

The European Commission (EC) began a safeguard investigation into steel imports on March 26, while Turkey began a similar investigation on April 27.

These investigations were started in attempts to prevent steel product shipments being redirected from the US to the EU and Turkey respectively, after the US announced its import tariffs last month.

Mesh-quality wire rod prices in both Northern and Southern Europe are likely to remain stable in May, amid low market activity.