Lack of new construction projects tempers optimism in northern Europe

Concern about the lack of new projects is widespread in northern Europe. Most long product distributors reported an improvement in sales activity in June, relative to May, which in turn was better than April. Nonetheless, volumes remain below pre-lockdown levels. Numerous steel buyers are apprehensive about the near-term prospects for the construction industry, particularly regarding the lack of private funding available for new schemes.

Rebar prices fall amid cheap offers

Basis prices for rebar, across northern European, fell below €200 per tonne, in June. Buyers negotiated discounts with local mills, which eventually succumbed to the pressure exerted by cheap offers from Italian suppliers. 

In Germany, large volume purchases were limited in recent weeks, but cutting and bending companies report healthy order books. Belgian construction-related firms remark that they are completing pre-lockdown orders that they had on their books. However, new business is very slow. Construction and infrastructure activity has been maintained at a good level, in the Netherlands, throughout the coronavirus crisis, but the outlook for new schemes is poor.

Demand for bars and beams weakens

Consumption of structural sections and beams is fair, in the Netherlands, but the number of new projects is dwindling. Belgian distributors report soft order intake. Producers have spare rolling capacity, with delivery lead times as short as two weeks.

Regional merchant bar producers accepted low-priced bids from buyers in the Netherlands, in order to secure volumes as they recommenced operations. Belgian buyers are limiting purchases, as they believe any upturn in basis values will be gradual. Sentiment needs to improve for them to feel confident to procure large quantities of material.

Most business is booked on a short-term basis, with little forward activity. Delivery lead times for certain non-standard dimensions are extending because many mills have insufficient orders, to mount a rolling for special sizes.