The European longs market has showed substantial weakness in demand this week, although there have been no major downward adjustments in the prices of rebar or wire rod. In spite of a general lack of trust in the market sentiment, the bottom has likely been reached, as prices are unlikely to fall further under the current conditions, at least in the rebar market.
In the Italian rebar market, prices have been reported at €250-260/mt ex-works base (€515-525/mt ex-works including regular extras), with lows of €240/mt ex-works base (€505/mt ex-works including regular extras). Demand is still low, as end-users are reluctant to make purchases and they are waiting for prices to reach the minimum level. According to a representative of an Italian steel mill, however, this level has already been achieved, and "waiting too long would mean not receiving the goods on time" because of logistical problems on Italian territory. According to an Italian trader, however, the difficulties derive from oversupply: "If producers do not come up with the idea of stopping their plants, prices certainly cannot recover" he said.
A small price recovery in the longs market is instead happening in Germany, where, due to the increases in scrap prices and the previous lack of rebar, prices have settled slightly upwards.
Small declines have been recorded in the wire rod market in Italy, "in the wake of the negative information about scrap that was circulating in May", a source commented. The market, however, seems to be moving towards stabilization, and demand is now balanced by supply. According to the latest SteelOrbis surveys, wire rod prices in the local Italian market have declined by €5/mt compared to previous levels and are standing at €620-635/mt delivered for drawing quality wire rod and €605-620/mt delivered for mesh grade wire rod.
In Germany and Poland, on the other hand, wire rod prices have been reported at higher levels, equal to - respectively - €645-660/mt delivered and €630-645/mt delivered for drawing quality wire rod and €610-625/mt delivered and €600-620/mt delivered for mesh grade wire rod. Poland is particularly affected by the unfavorable exchange rate with the dollar, which has weakened from $1 = PLN 4.14 at the beginning of the year to $1 = PLN 3.68 on June 12.
As for the export market, ex-Greece prices for rebar and wire rod have been reported at €575/mt FOB and €570/mt FOB respectively, while there was no change in rebar export prices from Spain to UK ports, which remain at around €550/mt FOB.
Finally, the import market from Turkey has also been stable and lacking movement, with rebar prices being reported at €495-510/mt CFR and wire rod prices at €510-515/mt CFR. Prices are based on the exchange rate $1 = €0.87 (European Central Bank, June 11), and have marked a slight decrease on dollar basis but a slight increase on euro basis due to exchange rate fluctuations.
