Rapid and steep price hikes, as well as high energy prices are impacting manufacturing activity in Europe and inflation is hampering consumption, which are causing the long products market to deteriorate. However, it is difficult to understand why the market has been so silent in recent weeks and what has been causing prices of scrap to drop by such significant margins. So says the International Rebar Exporters and Producers Association (Irepas).

Despite weak demand and dropping international values, EU rebar mills are in a good position to maintain their prices at high levels, thanks to Turkish and Algerian imports being out of the market since quotas expired in April.

EU prices are also supported by no sign of safeguards being relaxed. “Brussels is responsible for the detrimental usage of the ‘all other countries’ quota in April because of the strange handling of the Russian and Belorussian quotas,” Irepas says in its May short-range outlook.

The pricing premium on ferrous scrap, which was an effect of the Russian invasion of Ukraine, deteriorated during April as Russian semi-finished products have been able to find destinations in Asia and Turkey via trading intermediaries, Irepas observes. Russian ferrous materials trade at a steep discount to other suppliers, with fewer destinations available.

There has been a slowdown in China, meanwhile, due to the Covid-19 lockdowns and property developers still being in trouble after the Evergrande crisis, which is putting pressure on global raw materials prices. The post-Covid situation in major Western markets is, on the other hand, boosting consumption.

“Competition in the global longs market remains very regional due to trade measures. But Russian exports have been causing significant disruptions as far as pricing is concerned. The war in Ukraine and the worldwide uncertainty does not help the markets to resume their normal business mode. The situation is very challenging when trade is very intermittent and so competition is not very intense,” Irepas concludes.