Posted on 14 Nov 2019
While most players in the German rebar market expect prices to stabilise on the intake side, the final weeks of the year may still bring fierce competition downstream, Kallanish hears.
“Mills are trying to bring up prices, and I do think we are past the low point,” one buyer says while describing the prevailing mood. He adds that mills were making no money at base prices of below €200/tonne ($220/t), translating to €465/t delivered.
He notes however that it is more interesting to look at the distributors and their business conduct. “I do hear of offers below €500/t on the sell side for bent rebar,” he says, giving an example of a long-term supply deal for some 2,000 tonnes of the material over one year. “I wouldn’t do that, we sell for prices in the higher €500s, and yet our books are full; but some are speculating like that.”
He explains that bending shops needs to add some €80/t to their intake price in order not to make a loss, let alone make a profit. The line for breaking even would be in the mid-€500s.
For smart distributors, rising mill prices can be an opportunity for doing business among themselves. “Now that some mills try to go for a spot price of €220/t base, I’d better go to a wholesaler, given that I’m too small for mills anyway,” one buyer says. “The agent at the wholesaler would charge me maybe only some €10/t more than he paid to the mill. That way I get a good price for low volumes, and the agent gets a bonus for clearing the inventory; it’s a win-win.”
