Falling Demand Stifles Trading in European Steel Wire Rod Market

In the European market, the Steel Wire Rod prices edged toward the downward direction after initiating a declining trend last week. Steel Wire Rod mills successfully targeted higher prices before the Christmas closures, but the all-pervasive wait-and-see attitude among buyers, combined with weak demand, resulted in few trades. According to manufacturers, some customers are ordering back-to-back, while others are waiting and seeing, with prices expected to fall further in February. Meanwhile, buyers reported that the Steel Wire Rod market remains stagnant. Market participants in the sector report a low level of new order intake and a continuing destocking process throughout January. Sales are being implemented in small volumes and mostly back-to-back. Construction firms' confidence is weakening due to the hesitant economy and bank mortgage lending reduction.

According to our sources, some market participants reported an increase in Steel Wire Rod inquiries, while others said the market remained dormant. After the Christmas/year-end holiday closures, the Steel Wire Rod market has mainly remained stable after the reopening. Furthermore, lower energy costs and weak demand may put further downward pressure on prices. The Steel Wire Rod market is flat this week, energy prices are at a 10-month low, and scrap prices are stable. The market remains dormant, and demand remains on hold. Prices have fallen slightly, but buyers believe Steel Wire Rod will fall even further shortly.

Additional costs will be saved by reducing turnaround spending, purchasing raw materials, and reducing some spending. The cost-cutting measures, intended to prioritize business operations towards more cost or growth-advantaged markets in the aftermath of the shifting energy cost landscape seen since the start of the Ukraine war, are expected to eliminate around 6% of the company's global workforce.

Prices for Italian Steel Wire Rods are starting to fall after demand did not resume as expected following the winter holiday break. The market remains quiet, with only a few contracts being signed and always for small amounts. While the market is slow, distributors say they have orders from the construction sector. Any price increase, however, results in a halt in sales because customers refuse to buy Steel Wire Rods above a certain price level. Due to a lack of orders in recent weeks, some local producers have only partially resumed output this week. One electric arc furnace has been turned on, and the second will be restarted in February 2023. Thus, ChemAnalyst predicts that Steel Wire Rod prices in the European market will fall until mid-February due to a lack of domestic inquiries and higher inventories in the regional market.