Some long steel traders in Spain anticipate a collapse in rebar supplies. Demand is practically being reduced to zero as a result of the constant increases in prices of the material. The situation has worsened further after most producers temporarily stopped production due to the high cost of energy, as well as scrap shortages.

Sources tell Kallanish they are concerned about the negative effect the situation is having on their activity and the construction sector.

"In the last month of 2021, traders and distribution centres saw their margins drop precipitously as a result of high rebar prices. Now, with the conflict between Russia and Ukraine, our market has been disproportionately impacted,” a market participant comments. Spanish steel companies have suspended quotes until further notice after rebar prices soared €230/tonne ($251.78/t) in one week, the source confirms.

According to a trader, current long steel prices are unsustainable – and unaffordable – for maintaining previously agreed supplies. “Raw material costs are equal to or even higher than the long-term rebar supply contracts we already have. Under these conditions, our activity is becoming unfeasible to continue supplying material,” a source explains. “The increase in electricity and gas prices is a fact that will continue to increase uncertainty in the steel sector and this situation will not be reversed quickly.”

A Spanish steel distributor confirms that the domestic construction sector is almost at a standstill. “High energy prices are having a strong impact on the entire chain, from the steel plant, through our hubs, to end-users,” a trader from the Mediterranean region observes.

Another market participant points out: “There is a tremendous mess with delayed payments of credit to banks, recalculation of projects. Some construction companies say they will soon be bankrupt. The situation is very serious. Nobody assumes to continue buying and building with rebar prices that exceed €1,000/t.”

All sources polled are convinced the situation can be resolved only with urgent intervention from the Spanish government.

Rebar is currently sold domestically in Spain at €725-730/t ($793.6-799.3/t) base. Including €262/t size extras, transaction values are at €987-992/t ex-works. Some offers have also been heard at €1,000/t delivered for 16mm rebar.