According to the British analytical agency MEPS International Ltd., at the end of April prices for European long products began to grow gradually, especially in the first half of May. This trend will continue until summer. Manufacturers offer limited volumes with short availability before leaving the market. Imports are limited to warranties, transportation costs and funding. Insecure delivery of confirmed orders and exhausted credit limits add to the frustration of shoppers.
Turkish scrap buyers have recently returned to the market, leading to higher raw material prices. European mills have responded to volatile scrap prices by providing limited amounts of steel in a very short period of time. Once these orders are placed, manufacturers leave to take an inventory of the orders and estimate new manufacturing costs. As a consequence, market prices change on an almost daily basis.
Uncertainty over supply from the Liberty Group prompted buyers to reserve additional volumes elsewhere. This has led to an influx of orders, especially from the large Italian bar makers. The order books were closed to preserve existing schedules. As a result, the supply on the market was further reduced.
The prices for commercial bars and structural profiles were the first to rise in the range of long products. The rebar, which is usually the most responsive to scrap movement, has had only modest results at first.
Market participants question the sustainability of the current steel price for both long and flat steel. Increased costs will affect the viability of many private projects. However, the existing demand is good, supported by vaccination programs and government stimulus packages. Delivery is limited. Unlike imports, the export of factories from the EU is not limited, and their prices are attractive for other regions.
Credit is now the main topic for buyers, even if it is not available. Steel prices have more than doubled in recent months. Distributors and service centers are considering cutting inventory rather than tying up the money. Lack of finance may hold back further growth.
Banks and merchant insurers did not adjust credit limits as fast as the rise in steel prices. They are conservative in their approach and do not want to increase their coverage for market speculation.
MEPS expects overall steel demand to remain strong. Manufacturers are considering extending summertime stops to control supply on the market. These factors and limited imports will keep prices stable. Loose guarantees, a shortage of loans and the delay in private projects can slow down demand for steel from local suppliers.