The European longs market has been rather tense and worried about the consequences of the military escalation in the Middle East this week, so much so that most local long steel producers have decided to temporarily suspend their March offers while waiting for a clearer picture.
"Everyone is concerned, bewildered and waiting," a source at a rebar producer in Italy said. "Mills have suspended their quotations," an official at another Italian mill said. "There is talk about price increases, we do not yet know by how much, but it will certainly not be €10/mt," he added. Mills’ requests for rebar continue to be around €300/mt ex-works base (€560/mt ex-works including regular extras), but the few deals concluded remain nailed to €280-290/mt ex-works base (€540-550/mt ex-works including regular extras). For now, most producers are waiting to understand what the real impacts of the war in the Middle East will be on operational costs, including gas, energy and raw materials. "Speculation is becoming wild already and affecting logistics, which were already in a critical situation," a trader commented.
After the price increases of €20/mt already confirmed for March sales, several mills in Germany have also temporarily suspended their rebar offers, with one producer currently being "out of the market".
In Poland, the latest rebar offers in the local market have been reported at €605-660/mt CPT, but at the moment it seems that these levels are no longer valid due to the latest international geopolitical developments.
The same tense scenario is emerging in the European wire rod market, where several sources have reported that many mills in Italy, Poland, Germany and Spain have suspended their quotations for March sales. "We are all waiting," a source said. "Gas and electricity prices could potentially skyrocket - as happened a few years ago - so let's wait; but not too long, otherwise it becomes risky. As early as next week we will have to start offering again and the offers will be increasing," he concluded.
On the customers’ side, however, demand continues to remain flat, since even with producers’ price increases it would be very difficult to reverse them for retail sales.
On the export side, the markets remain silent, except for rebar and wire rod offers from one producer in Greece that have increased to €580-590/mt FOB and €585-595/mt FOB, respectively, i.e., €5-15/mt higher than the last reported levels.
On the import side, offers from Turkey have recorded increases on dollar basis, which were mainly due to higher oil and freight prices rather than to an actual recovery in demand, especially from Europe.
Turkish rebar has been reported at €500-520/mt CFR, up €15-20/mt compared to the previous week, also due to the variation in the euro-dollar exchange rate, today at 1.16, against 1.18 last week. For wire rod, official bids have been reported at €510-530/mt CFR, but the workable range is reported to be at around €500-515/mt CFR, up €5-10/mt week on week.
€1 = $1.16 (European Central Bank, March 5)