EU LONG STEEL OUTLOOK: December prices to weaken on seasonal demand drop

Finished long steel prices in Europe are expected to weaken in line with the seasonal fall in end-user demand in December, according to market participants.

Domestic offer prices from European steel mills remain supported by high costs for graphite electrodes, refractory materials and ferro-alloys, but are likely to weaken amid the seasonal downturn in end-user demand.

“The rebar price has slowly gone down [due to] low demand, even if the prices for scrap, energy and electrodes are still high,” one distributor in Southern Europe said on November 29.

The rebar market in Northern Europe is “stagnating”, according to one Northern European producer source.

Long steel mills in Germany, including Badische Stahlwerke, Riva and Feralpi, will close down “for several weeks” for the usual winter maintenance, a market participant in Northern Europe said.

Despite the weaker December demand, prices for domestic rebar in Northern Europe are likely to rise in the first quarter of 2018 amid better demand and stronger cost pressure on steelmakers, including an expected rise in electricity prices, sources told Metal Bulletin.

Expectations that global rebar prices will rise due to China’s winter production cuts is another significant factor behind the expected price rise in European domestic prices, market sources said.

Market participants said there was no more availability of mesh-quality rod for deliveries in December amid European mill maintenance shutdowns and lower end-user activity, with mills now quoting prices for delivery in January 2018.

December export prices for Southern European rebar are also expected to remain at similar levels to November’s prices amid low buying demand from Algerian importers.

Metal Bulletin’s weekly export price assessment for Southern European rebar was €475-485 ($563-575) per tonne fob main ports on November 29, down month on month from €485-495 per tonne fob on October 25.

Material booked now would only arrive in Algeria in January, both because of a new regulation from the Algerian Central Bank (ACB) and the fact that many Southern European mills are fully booked fulfilling existing orders over the weeks prior to Christmas shutdowns, sources said.

However, the majority of licenses held by Algerian rebar importers expire on December 31, which is likely to heavily limit buying activity.

In Northern Europe, a seasonal fall in demand led to a weakening in rebar prices over November, down by €15-20 per tonne over the month to €530-560 per tonne on November 29. Southern European domestic rebar prices fell by €5-10 per tonne over the month.

Certain rebar producers in Spain attempted to raise their offer prices in November in an attempt to jolt their domestic market back into life, sources told Metal Bulletin on Wednesday November 22.

Domestic mesh-quality wire rod prices also fell over the course of November on weaker demand, with Northern European prices down by €5-10 per tonne over November and Southern European prices down by €15 per tonne over the month.

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