Beam and mbars supply to tighten in Europe

Upward price pressure in the beam and merchant bar sector is growing amid a mismatch between demand and supply.

Italian prices gained €130/t during May, with June indications €20-50/t higher. Another increase for Italian 100-180mm H-beams, taking them to €950/t delivered, has been mooted this week. Base prices for Italian merchant bars were hiked to €470/t late this week, with effective levels standing at least at €880/t delivered.

The construction sector has started to recover and further stimulus injections are expected under the EU recovery plan, which boosted market sentiment. This exacerbated the supply-demand imbalance, with European mills having strong order books — like the coil market of recent months, supply is becoming more important than price for some buyers.

The appetite of central and southern European customers rose more significantly amid tight trade restrictions, supporting the highest beam price level in Europe, at €950/t delivered. In southwest Europe prices were €50/t below. But this midweek some customers in Spain received emails suggesting a leading domestic producer had stopped accepting new orders, which some attributed to its intention to sell at higher levels later.

Limited quota allocations, which were almost immediately depleted during April by key merchant bars and sections suppliers into the EU, provided support to EU suppliers in central and southern Europe. In the meantime, a one-year extension of the safeguard measures is yet to be confirmed by the EU, which created uncertainty around imports for the next quota of deliveries. The overall share of heavy section imports into the top seven EU importer countries in central and southern Europe was 60pc in 2019 at 220,000t, and amounted to 83pc in the first quarter of 2021 at 46,802t, Eurofer data show.

Southwestern European producers also received growing interest, particularly from the UK, where Liberty Merchant Bar has reduced output given its financial difficulties. As a result, import quotas for product 12 from the EU was promptly exhausted, with key European suppliers into the UK heard suspending loadings from today. Domestic and EU sellers into the UK increased merchant bars and heavy sections offers by at least £80/t since mid-May. British Steel moved its offer up by £150/t during May.

But with new construction projects underway market participants are anticipating supply to tighten and prices to keep rising, with many concerns expressed. End-use customers are not ready to accept these increases, while limited credit lines push stockists to reduce their level of inventories, one participant said. And this does not account for the projects that are likely to be initiated under the EU's recovery plan, which has not yet started, he said.