The price decline trend has continued in Italy's domestic rebar market. Both from market reports and from officially-released base reference prices it is seen that rebar prices in the Italian market have fallen by a total of around €150/mt in the past seven months (since April).
According to the Brescia Chamber of Commerce Price Commission, current base reference prices for rebar are in the range of €215-220/mt, following a drop of €5/mt off the lower end and €10/mt of the upper end of the price range over the two weeks up to December 3. The new price range is the lowest since February 2006.
Italian producers made an attempt to halt this downward trend with their announcement in the first days of November of an increase of €20/mt compared to the price levels at the end of October. However, this attempt was a failure and prices continued their fall.
The key to understanding the current conjuncture is without doubt the strong levels of supplies which outweigh demand by some distance, causing a slide in quotation levels. The slowdown in both apparent and real demand has aggravated this situation. Despite the fact that stocks are medium-to-low, traders are limiting themselves to the bare minimum of necessary purchases and are maintaining a wait-and-see stance as to future developments. The approach of the Christmas holidays, the easy availability of material and the uncertainty in the market are causing distributors to adopt a cautious approach and to postpone their purchases until January.
With regard to consumption, the construction sector is going through a particularly weak phase at the moment. On the other hand, there has been a light pickup in export quantities. Current quotation levels are so low that, despite the depreciation of the US dollar against the euro, they have facilitated rebar sales in foreign markets.
Looking to the immediate future, players in the Italian rebar market are of the view that price levels at the end of the year will be the same as present levels. The cost of billet leads us to believe that there is no room for any further downward correction.
As regards 2008, the market players who were interviewed were unanimous in their predictions: the entry into the market of new players and capacity increases at currently operating producers look likely to increase difficulties in the Italian rebar market.