Italy: Steel scrap market report, March 2014

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Schrott (Foto: Kürth / Recyclingportal)

Genoa – The downward trend of the ferrous scrap prices (returned to the same level of Sept/Oct) has not been influenced by the worldwide DRI/HBI lower availability. The Venezuelan DRI/HBI producers are still facing the 2013 hurdles, like the creation of a central unit price fixing committee, the lack of export licenses and the iron pellets feedstock short availability. All that, plus the current political turmoil, restricted the DRI/HBI export capability to the lowest level ever seen since long time.

The Libyan producer is still suffering hard technical issues, postponing the production recovery every month, since last December. Only small quantities of stock grade HBI have been exported from Libya during Jan and Feb. The DRI/HBI production, in the MENA Countries, is conditioned by the increased use of the Natural Gas in power generation, petrochemicals, longterm NG export commitments and other NG consuming industries, more profitable than the DRI/HBI production. In this area almost all the EAF Mills are now using the DRI/HBI produced at home to feed their furnaces. Only the Russian producer is on the market selling the monthly quantities, without any reported problem. India and Iran, two of the largest DRI/HBI producers, are not sizeable on the trading market. In USA and Canada the Shale Gas development and its utilization also in the DRI/HBI production, will have some effects on scrap markets, both due to the positive impact on the steel prices and the higher volume of scrap available for the export.

February has been a quite month here in Italy, where the scrap prices followed the same trend of the other European and deep-sea markets. The weekly price on the domestic market dropped up to 20€/pmt (15€ the average), with large deliveries to the mills. The monthly contract from the European countries have been settled with a 10/15€ reduction. Also the deliveries from abroad have been on the standard volumes as the winter remained as such on calendars. Only some difficulties are reported due to the late return of the empty wagons. The arrivals at the Italian ports were abt 20 Kt for scrap, abt 100 Kt for pig iron and abt 16 Kt for HBI. Mills inventories are now a little better than the beginning of January.

Following the February official average prices reported (€/pmt delivered):

New arising E8:
Italy 290
France 295
Germany 295

Shredded E40:
Italy 295
France 295
Germany 295

Demolition scrap E3:
Italy 270
France 270
Germany 270

The situation in the Black Sea could be relevant for March prices, being Ukraine and Russia very important scrap sources for the Turkish mills. Leaving aside this not simple trouble, it seems that the market will remain fairly calm with only small price adjustments, considering also the seasonal better demand of rebars and long steel products.

Nothing new about the Ilva Taranto. Reading the last (and fresh as it is dated Feb 28th) Commissioner report, the 2013 sales has been 6.1 mln ton (25% less that the 2012) and the total steel production at the Taranto mill has been of 5.7 mln ton. The gross revenue has been 3.8 bln € and 166 mln € has been the investment for the cleanup and revamping works. Other 500 mln € are scheduled for the 2014 Q1.

PIG IRON – H.B.I.

The pig iron arrivals reported in January has been important, around 100 kton. Consequently the pig iron inventories at ports and mills are well recovered. The last pig iron offers are quoted a little bit lower than $400 pmt CIF for March shipment. For the first time the USD/UAH rate has crossed 1$ = 11 UAH. This is relevant on the export of basic pig iron (but also steel and semis in general) on the price side, due to the possible decrease of the price offered. Venezuelan and Libyan HBI are still not offered, due to technical issues and political turmoil. The last HBI price indications are around $ 355/365 pmt CIF Italy.

Source: Alocci Rappresentanze Industriali