EUROPE LONG STEEL WRAP: Prices rise on higher costs, Algerian licences issue

Finished long steel prices have been on the rise in Europe through July and are expected to stay at high levels in August because of increased production costs.

Meanwhile, modest demand is being offset by lower output as a result of the scheduled maintenance outages that most European steelmakers undergo in July-August. The most recent announcement on Algerian import licences is likely to provide further support for rebar demand.

Spanish steelmaker Celsa will introduce an extra charge of €9 ($11) per tonne on all of its products across Europe from the beginning of August. The surcharge is to be introduced because of raised costs for ferro-alloys, electrodes and refractories.

However, the company’s Polish subsidiary is not increasing its extras, a source said.

Compatriot Spanish steelmaker Megasa has not followed Celsa’s move yet but may consider doing so, a source at the company said. “Let’s see how the market moves and we will decide [later]. So far, we are raising the base price rather than changing the extras,” the source said.

Meanwhile, Italian long steel manufacturers are “not [increasing extras] at the moment”, according to a producer source in the Southern European country.

Rebar prices have been going up through July, with Metal Bulletin’s weekly price assessment for domestic rebar in Southern Europe at €430-445 ($505-523) per tonne delivered on July 26. This was up by €30-35 ($35-41) per tonne from €400-410 ($470-482) a month earlier.

The current assessment consisted of a base price of €150-165 ($176-194) per tonne ex-works, around €15 ($18) per tonne for delivery costs and an average €265 ($311) per tonne extra.

The rise was supported by an increase in domestic ferrous scrap prices in Italy of €20-30 ($24-35) per tonne month-on-month in July, as mills were restocking before August.

Rebar prices were widely expected to continue to go up in August amid an uptrend in the international scrap market, and lower availability of finished steel because of scheduled maintenance outages at the EU’s mills during the summer holiday period.

Demand has remained subdued during July, especially on the export side, and is likely to remain limited despite import licences finally being distributed in Algeria.

The North African country has been a key market for finished long steel products from Southern Europe, with 2.60 million tonnes imported last year, but it delayed announcing import quotas or issuing import licences for 2017 until late July.

For the rest of 2017, Algeria issued rebar import licences for a total volume of 534,100 tonnes last week. This was “better than nothing”, one market participant said.

Metal Bulletin’s weekly price assessment for Southern European rebar exports was €435-450 ($511-529) per tonne fob main ports on July 26, up by €50-55 ($59-65) per tonne compared with €380-400 ($447-470) per tonne fob in late June.

As much as Algeria’s announcement on licences was long-awaited by most Southern European sellers, optimism was not shown by all market participants.

“This move will not have a major effect on the prices from European producers, [because] not too much [of the volumes] will come from new production,” one source said, adding that a lot of material has been already produced for Algerian clients under contracts signed earlier at lower prices. “First, these quantities will now be shipped to Algeria.”

Meanwhile, the rise in scrap prices will support rebar prices, the source said.

“Do not under-estimate [the value of] 500,000 metric tonnes, please,” another source said. “It is nearly the total annual production of one normal mini-mill.”