The European longs market has shown overall more stable sentiments this week compared to previous weeks. Following the decreases recorded in June and July, most market players believe that the downward trend in prices is losing momentum.
In the rebar segment, some Italian producers have brought their price back to around €440/mt ex-works base (€700/mt ex-works including regular extras), stating that previous offers in the range of €410-420/mt ex-works base (€670-680/mt ex-works including regular extras) will remain valid only until the end of the month. Market sources have underlined, however, that “attempts to increase prices are not translating into purchases”, while demand continues to be very slow. According to several players, the market has reached a stabilization phase, with producers determined to defend current levels ahead of the autumn recovery.
In the wire rod segment, the picture also appears relatively stable. According to sources active in the Italian market, prices between June and July have remained mostly unchanged, with slight downward adjustments linked to the conclusion of specific orders. The situation is different in other European markets, where orders booked in July were reportedly concluded on average at lower levels than in June, with reductions of around €5-8/mt. A further possible decrease of around €10/mt is expected in August, though much will depend on the extent to which logistics costs affect customers' willingness to buy.
The differences between the Italian market and the wider European market remain clear. While Italy is seeing an attempt to consolidate prices, several sources have reported further downward pressure in some continental European countries. In Germany, for instance, market players have reported reductions of €20-30/mt, while in Poland rebar prices are said to have come to around €610/mt DAP for delivery by truck, in a context influenced by unfavorable exchange rate movements (€1 = PLN 4.33 on July 23, versus €1 = PLN 4.28 on June 23).
On the cost side, energy and transport costs have started to rise again. However, the combined effect of weak demand and the summer stoppages is making it difficult to pass these increases on to the market.
Another issue concerns the safeguard quota system and, in particular, the position of imports from Turkey. Several sources have reported that a recent customs interpretation has allowed excess volumes from Turkey's country-specific quota to be automatically transferred to the available additional quota, thereby avoiding the immediate application of duties which many importers had considered likely.
According to market players, this interpretation has come as a positive surprise to the market. Some customers were in fact preparing to bear significant customs charges on Turkish supplies, while the latest indications have significantly changed expectations. However, uncertainties remain over the future application of the mechanism, and several market players have stressed that the situation will depend on the remaining availability of the additional quota.
Finally, in the import market, prices from Turkey have increased slightly compared to last week due to exchange rate movements. Rebar offers have been reported at €540-550/mt CFR, up slightly by €5/mt, while wire rod offers have been reported at €550-555/mt CFR, also up slightly by €5/mt on the lower end of the range. Meanwhile, the remaining import quota allocated to Egypt stands at 24,778 mt for rebar and 2,213 mt for wire rod.
€1 = $1.1408
