EU LONG STEEL OUTLOOK: Prices expected to remain strong into October

Finished long steel prices in Europe are expected to remain strong into the fourth quarter of 2017, supported by reduced availability, strong demand and higher production costs, according to market participants.

“There is a [supply] shortage in the market because some EU mills, which are normally major suppliers, are not supplying material as usual,” one trader told Metal Bulletin on Wednesday September 27.

“Some mills cancelled orders that were booked months ago at lower prices, due to higher production costs,” he added, referring to rising electrode costs and the early-September peak in ferrous scrap prices.

Ferrous scrap prices have softened in recent weeks, but the drop is not expected to last for long, with mill demand still solid, according to Jens Björkman, head of ferrous sales at metal recycler Stena Metall.

In any case, the possibly short-lived fall in scrap prices is expected to be offset by the increased cost of electrodes, “so there will be no change in producers’ cost structure”, according to Murat Cebecioglu.

Cebecioglu is export manager at Turkish long steelmaker Icdas, and was speaking at the 77th Irepas (International Rebar Exporters & Producers Assn) meeting in Athens, Greece, on September 26.

European costs for rebar and billet produced through the electric arc furnace (EAF) route have risen by about €40 per tonne, according to Celsa Steel commercial director José Angel Rey.

In Southern Europe, rebar prices are likely to continue to have support over the coming weeks from low stocks at domestic customers and renewed buying activity in the Algerian import market, participants said.

The export rebar price of €500 ($591) per tonne fob is considered by Southern European export traders to be the highest level that will be attained in October.

Metal Bulletin’s average export price assessment for Southern European rebar rose month-on-month by around €32 per tonne to €492 per tonne fob main ports in September.

This was a result of Algerian steel product importers resuming their rebar buying activity in the middle of September, months after the country’s ministry of commerce issued import licences, albeit for significantly reduced volumes.

Algeria’s ministry of commerce then issued additional rebar import licences amounting to around 400,000 tonnes on September 12, bringing the total rebar import licence volume for the remainder of 2017 close to 1 million tonnes.

Domestic rebar prices increased during September by €20-35 per tonne in Northern Europe and by €5 in Southern Europe, while export prices narrowed upward by €10 per tonne.

Domestic wire rod prices went up by €20-30 per tonne over September in Northern Europe, and by €10-15 per tonne in Southern Europe.