Genoa, Italy – „September is over, at last!“ The first spontaneous comments of several steel chain operators state that this month is similar to the one in 2008, when the media headlines were “end of a positive cycle”, “market turmoil”, “blood bath”, “slumping markets”, “slowdown in consumption”, etc. But there is a big difference between September 2008 and this one: Before 2008 something was saved for rainy days, but now nothing of that is still available. The breaking of the Brick’s economies and the slow growth in Europe plus the strong steel Chinese export are some of the reasons for this situation. So far the 2015 seems to be a race to the bottom.
During September the scrap prices in Italy moved more than 20€ on the domestic market, where the mills bought day by day to cover their needs. The prices reduction for the monthly contracts from the European suppliers has been low, around 15€, but at the same time the volumes purchased have been lower than the past. The steeelmakers sales are suffering not only for the competition of the cheaper import of semis and coils, but also for the end-users continuous postponing of the inventories replenish, as they are convinced that to buy a day later could be better than a day before.
The mills are working with very short order-books, reducing and suspending the steel production some days more during the month and consequently lowering the metallic raw materials purchases. Last but not least the VW Diesel-gate is influencing also the more than one thousand Italian suppliers of the VW group, that right now are receiving less orders of steel and mechanical components.
In this situation the mills and the scrap yards inventories are covered enough. The arrivals at the Italian ports in September were abt 3 Kt for scrap, abt 85 Kt for pig iron and abt 135 Kt for HBI. The scrap dealers are again facing the low scrap generation, the strong competition, some mills delays in payments and the compressed margins.
Following the September official average prices reported (€/pmt delivered):
New arising E8:
Demolition scrap E3:
The October contracts are oriented to further price cuts, maybe on the same level of the ones of September (or more considering the steelmakers aim), following the European and deep-sea market trend. The planned electric mills production reductions (abt one week during October) will influence further the purchased volumes.
PIG IRON – H.B.I.
The HBI arrivals at the Italian ports during September have been significant. Cargoes arrived mainly from Venezuela and Russia, but also one from Libya is reported. Last HBI offers are now below the wall of 200$ pmt CIF Italy. The pig iron arrival has been lower than usual, maybe influenced by the restart of the production at the Arvedi Trieste BF. The last pig iron offers are quoted around $210 pmt CIF for November/December shipment. The inventories at ports and mills remain well recovered.
Source: Alocci Rappresentanze Industriali