Purchase of long products in Europe: factories withdraw offers
Rebar manufacturers in the Northwestern European market reduced their supply in the week that began on March 2, amid escalating conflict in the Middle East.
Sources in steel and distribution companies confirmed that rebar manufacturers had refrained from making offers since the beginning of the week, awaiting clarity on potential cost factors and assessing the prospects for price increases in the near future.
"European plants have completely withdrawn from the market at the moment," said one of the domestic steel producers. "It makes sense to wait and see before trying to raise the prices we need, but first we need to assess what customers will actually be able to accept."
McCloskey's sources did not wish to comment on the price at which the plants could return to the market; buyers are aware of rising natural gas prices and rising electricity prices, which they expect sellers to try to pass on to consumers.
It was stated that European steel producers are profiting from the Middle East conflict by insisting on a review of the EU electricity market structure, which sets the market price for wholesale electricity based on the most expensive energy resources used, which for the EU means that natural gas prices often inflate industrial electricity costs.
Somewhat unexpectedly, the sentiment was mixed as to whether the EU would see a sufficient increase in electricity prices to force buyers to meet producers' needs in covering costs, with some market participants expecting minimal impact due to recent US obligations to insure and support natural gas transit through the EU. The Strait of Hormuz.
There have been reports of import offers – where they were valid – at stable prices, although traders are generally still unwilling to participate in international rebar trade due to low profitability compared to domestic production. Turkey, the leading exporter of fittings to Europe, is increasingly conducting direct negotiations between the plant and consumers in the EU, which further limits the speculative possibilities of traders.
This week, McCloskey announced an increase in demand for Turkish-made rebars in Europe at a price of $545/ton FOB, which coincided with the withdrawal of offers from domestic steel manufacturers. The specified material can be supplied to Northwest Europe at prices competitive enough to stimulate distributor orders, especially given the possibility of the material arriving before the EU reviews its steel protection system, which is expected,