UK based MEPS said that low carbon wire rod selling figures are reducing in Germany after being stable for several months. Buying activity, for recoil suppliers, remains very slow despite the good weather which usually stimulates construction activity. Customers continue to purchase only small volumes at any one time.

Buyers have won discounts on the May 2012 numbers during recent settlements. Resale margins for medium sections are poor. Soft demand and falling scrap prices have led to some negative pressure on basis values.

Although German consumption of rebar is slightly better than in other parts of Europe, activity is nowhere near the norm for this time of year, which is usually the peak season for construction. Prices are amongst the lowest in the region and there is relentless negative pressure from cheap imports, particularly of Polish origin, and, more recently, from declining scrap values.

Despite efforts by merchant bar producers to secure a rise, ex mill basis numbers are the same as in the previous month. Sales are not strong enough to support a hike.

End user consumption is expected to remain dull over the next few months. Distributors are likely to continue to adopt a cautious approach to buying and only purchase for immediate requirements. Consequently, MEPS anticipates a softening of steel prices in the near term.

Source - MEPS - European Steel Review

(www.steelguru.com)