The upward trend recorded last week in the European longs market is not slowing down, though it seems to be mostly driven by an attempt by producers to increase margins and by end-users’ fear of further increases, rather than by an actual recovery in demand.
The heavy rains and winds in southern Italy have been causing severe damage, slowing down construction activities and consequently rebar demand in the domestic market, but higher operating and raw material costs are leading Italian producers to gradually increase their desired price levels, which, according to reports, have been settling at €320/mt ex-works base (€580/mt ex-works including regular extras) or higher. However, some market players continue to claim that, currently, orders are being closed at around €290/mt ex-works base (€550/mt ex-works including regular extras), a level that one source has defined as "incomprehensible". A source at an Italian mill commented, "The market is quite confused, but it is normal given the [price] increases we are asking for". Based on the information collected by SteelOrbis, it is likely that as early as next week new orders may be closed at prices higher than the abovementioned levels.
The same confusion has resulted in price increases of about €20/mt for drawing quality wire rod in Italy. The requests that SteelOrbis mentioned last week for €620/mt delivered seem to have materialized in some orders this week, even if the average reported levels stand at around €600-610/mt delivered, which is up by €10/mt week on week on the higher end of the range. "Market players are panicking a bit. Big producers are not offering, while others are asking for very high prices," an Italian source noted, suggesting that the market's acceptance of the hikes may stem from the fear of further price increases. "There is still talk of increases in February," an official at another Italian mill said.
As for the export market, rebar prices from Greece have been reported at €570-585/mt FOB, up by €15/mt week on week on the higher end of the range, whereas wire rod prices have been reported at €580-600/mt FOB, unchanged week on week. No change has been reported in rebar prices from Spain to UK ports, while price indications for rebar sales from Italy to central Europe have been mentioned at €530-550/mt ex-works.
In the import market, rebar prices from Turkey have been reported at around €500/mt CFR, down by €10/mt week on week, but even €485-490/mt CFR seems possible for higher tonnages. Wire rod prices, on the other hand, have been reported at around €510/mt CFR, also down by €10/mt week on week.
€1 = $1.20 (European Central Bank, January 28)