Global Steel Wire Rod Prices Head South Amid Weak Demand and Dwindling Scrap Cost

In the second week of May, the prices of Global Steel Wire Rod remained stable amidst unclear market conditions and a weakening economy. Presently, several factors are adversely affecting the European market, including diminishing scrap prices, escalating interest rates, amplified overall material costs for projects, and a deficit of skilled labor being faced by the nation's construction industry. The European Steel Wire Rod market is experiencing a gradual decline in both domestic sales and exports to other countries, with consumption coming to a standstill. This is causing the latest construction projects to be postponed, slowed down, or inadequately financed. The prevailing trend in the market is for buyers to opt for back-to-back purchases or delay buying due to uncertainty and limited visibility. In particular, the French private residential construction sector is experiencing a more significant slowdown compared to other European countries. This is due to the high-interest rates and stricter credit requirements imposed by financial institutions, which are hampering the sector's growth.

According to sources, Steel Wire Rod prices in Europe have remained stagnant this week due to a lack of demand and a subdued market. Many market participants are eagerly waiting for new orders to come in. Currently, there is minimal activity, and demand is significantly weak. As a result, pressure is mounting on European mills, which may have to decrease their price offers for Steel Wire Rods in order to secure new orders. Distributors and construction companies are currently holding high Steel Wire Rod stocks, leading to a month-on-month decline of around USD 45-55/MT in domestic Steel Wire Rod prices, with European producers reducing capacity utilization. In addition, the Riva Group's German rebar mill, Riva BES, is currently renovating its four-wire Steel Wire Rod mill located at Brandenburger Elektrostahlwerke (Germany). The project involves the supply of four slab spreading heads and compaction rolls simultaneously. The supplier highlights that the technical teams of Riva BES and Danieli have collaborated to develop a customized solution that utilizes the primary foundations and minimizes plant downtime. This partnership has resulted in a tailored solution that maximizes efficiency and minimizes disruption during refurbishment.

As trading commences for May, US Steel Wire Rod market participants are closely monitoring domestic scrap prices, with many speculating that any fluctuations in scrap prices could impact Steel Wire Rod spot pricing in the short term. In mid-April, spot pricing for Steel Wire Rod in the US started to slip, falling by USD 33/MT, following a decrease in scrap prices during that month's trading. Obsolete-grade scrap prices are expected to decrease by USD 30-70/gross ton in the US during May, leading major manufacturers to cut prices to attract buyers. Market prices surrounding larger tonnage transactions at significantly discounted prices have started to subside, with the majority of purchasers saying that they are not interested in such arrangements. In March, the US construction industry experienced a significant monthly decline in job growth, losing 63,000 net jobs, the most significant monthly decline since the early stages of the Covid-19 pandemic. This change could impact the demand for steel from the domestic construction market, which is a major source of demand for long steel products such as Steel Wire Rods and Rebar. While some buyers remain focused on inventories, uncertain about the demand picture for the first half of 2023, others anticipate strong demand from infrastructure bills and predict that activity could increase as the rise in interest rates slows down, especially starting in the second quarter.

According to ChemAnalyst, Steel Wire Rod prices are expected to experience a downward trend in the coming weeks due to a decrease in downstream inquiries from the construction industry. In addition, scrap values decreased in May, and it is anticipated that Steel Wire Rod prices will continue to decrease in the next month due to low demand.