While longs producers in southern Europe continue to seek increases, customers do not seem to fully accept them. In addition, trade has been affected by the new European safeguard measures on wire rod and other steel products and, in Italy, the loss of tax credits by energy-intensive companies. Uncertainties and production stops prevail in the southern European longs market.
At the end of June, in Italy, after rebar sales at around €350-370/mt ex-works base (€615-635/mt ex-works including regular extras), producers warned the market of their intention to stop production, prior to the traditional August vacation-related stops. After a few - failed - attempts by mills to sell rebar at €420-430/mt ex-works base (€685-695/mt ex-works), customers have been waiting and today the level to be considered is around €370-390/mt ex-works base (+€20/mt over the past fortnight and equivalent to €635-655/mt ex-works with extras). However, even at this level, sales encounter obstacles and end up with a tradable price equal to the lower end of the range, as buyers are not willing to pay the increased prices at this moment.
Local wire rod offers in Italy have been reported at €600/mt delivered, stable compared to two weeks ago.
In Italy, there has also been the loss of the tax credits by energy-intensive companies, which will mean an increase in production costs. On top of this, scrap seems to be in short supply and the price does not seem to be going down any further, thus leading Italian steel mills to make a decision for extended shutdowns of three to four weeks, so as to rebalance scrap and finished products and market flows.
In the export segment, ex-Italy rebar offers were reported at €550-570/mt FOB - compared with the range of €540-550/mt FOB from two weeks ago - while drawing quality wire rod offers are at €620/mt delivered, almost stable over the same period. Ex-Greece offers were reported at €575/mt FCA for wire rod and €585/mt FCA for rebar. "Demand is very weak. We expect some destocking in the next two months, mainly due to the shutdowns," said a Greek producer.
The European safeguard on wire rod and other steel products has been renewed, and now new countries (such as Egypt, Malaysia, Indonesia, India) are expected to be subject to country-spesific quota for wire rod. This, according to sources, will prove to be a major obstacle to the import of wire rod from these countries. "European wire rod consumers are not happy with this decision, but the EU has only amended the already existing regulation, which specified that, if a country exceeds three percent of imports on a given product, it is subject to evaluation by the EU regarding possible measures," commented an Italian source.
Currently, wire rod import offers have been reported at $580/mt FOB from Algeria (about €610/mt CFR southern Europe) and $575/mt FOB from Egypt (€555/mt CFR), while offers from Asia have been at around $525/mt FOB or around €630-635/mt CFR.