German rebar producer BSW halts production

German rebar producer BSW has informed its scrap suppliers that it has halted production for a month starting from 14 December.

The southern German mill will restart production at one of its two electric arc furnaces (EAF) on 14 January 2019. The stoppage is expected to reduce the mill's scrap consumption by around two-thirds to 70,000-80,000t in January, according to suppliers' estimates.

The downtime is longer than a typical maintenance as the mill is planning to replace and upgrade some equipment, market participants said. BSW would not comment on the stoppage or when it is likely to return to full capacity. But suppliers expect the mill will only be able to return to full capacity in February at the earliest.

The spread between scrap prices in southern Germany and other regions could widen in January as a result of the stoppage. The expectation of lower scrap consumption by BSW in January is likely to drive scrap prices down in southern Germany, while prices in other regions may receive continued support from improved steel demand from the construction and automotive industries. And the continued difficulties in transporting scrap on the Rhine because of low water levels means that southern German suppliers are not able to move abundance scrap to other regions in a cost-effective way.

Argus assessed E40 shredded ferrous scrap at €266.75/t delivered to mill in southern Germany in December, €5/t below the national average price of €271.75/t.

Riva in eastern Germany and Feralpi in central Germany are the two other large rebar producers in Germany. BSW has an annual production capacity of around 2.5mn t of crude steel.