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Weak demand and uncertainty weighs on European rebar market - 12 April 2012

Soft demand, reflecting uncertainty about the European economic outlook, and the exchange rate are continuing to weigh on the latest rebar offers in the European market, market participants told Platts Steel Business Briefing.

Despite hopes that the market could recover this week, after the Easter holidays, prices have slipped €5-10/t with northwestern European mills (Benelux and Germany) currently quoting around €545-550/t ($714-721/t) delivered while southern European mills are offering at €280/t base prices ex-works (effective €530/t) in their market.

Prices in Germany, seen as one of the best performing markets in Europe, have come under pressure from lower cost imports from southern European mills and central and eastern European mills. Market participants said prices have fallen by around €5-10/t in the last week to €530-550/t delivered (range for 12 mm rebar from importers and domestic mills) (see separate article).

In southern Europe, mills are more focused on the export markets due to the lack of demand in the domestic markets. As such, they are targeting not only Germany but also Algeria. At the moment, Spanish and Italian mills are in negotiations with traders and Algerian buyers to find the right level for May delivery: so far, only a few deals have been concluded, market participants said to Platts SBB.

According to traders, buyers and mills, rebar to Algeria is currently being offered at around $710/t cfr for May delivered, while mesh quality wire rod offers are at $715/t cfr for May delivery.

These offers confirm the decline that started two weeks ago and reflect the weakness of the exchange rate. Traders are attempting to lower prices to restore their margins, while mill sources report the need to increase prices to offset low domestic demand and higher input costs.


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