During the past week, new decreases have been witnessed in the Italian domestic rebar market. Currently, the average rebar price from Italian producers is at €495/mt ($629/mt) ex-works. Previous quotations approaching €505/mt ($641/mt) ex-works have definitively disappeared, while some transactions above the €495/mt level have been recorded.
The downtrend in the Italian rebar market has not come to an end, though in our previous analysis the market seemed to have stabilized somewhat. In fact, market operators state that in the last seven days they have observed another decrease, even if the rate of decline has slowed down compared to the start of June.
The main reason behind the weak price trend is the deep crisis in the Italian construction sector, which has brought producers' rebar prices to their lowest levels of 2012. Moreover, in the export markets demand levels have plunged because of the approach of Ramadan and also due to difficulties in obtaining credit, especially in Algeria. In any case, according to SteelOrbis sources, warehouses in Algeria are full enough to satisfy local customers' demand, which is expected to drop to minimal levels in July and to lack strength in August due to the hot weather. In this environment, Italian long steel producers are unwilling to give export offers, as they are aiming at reducing their output in order to achieve a better supply-and-demand balance.
According to the latest data published by the Italian steel producers association Federacciai, in April this year long steel output has decreased by 12 percent year on year and, as indicated by the crude steel output figure for May, this trend is unlikely to change in subsequent months.
The outlook for the coming period is quite uncertain. Some are worried by the steep downtrend in scrap prices, stating that this could make room for new decreases in long steel prices. Other market operators believe that rebar prices are close to or have already reached the bottom, and for this reason they think that the market is likely to enter the holiday period at this price level and will later start to show changes in September and October.
€1= $1.27