Genoa, Italy – The risk to face another difficult year is not faraway. The last figures on January to November 2015 from China, the main steel producer, showed minus 19.3 percent on the turnover, minus 73.3 percent on the sale prices, minus 2.2 percent on the steel output against the previous year, but also $ 8.18 billion lost by the steel makers. That could be the confirmation of a non-positive sentiment for all the steel chain operators.
Looking at the market with this strong uncertainty does not help the branch, but if the steel industry likes something better than surviving, it should be concentrating on what it can control, like cost and profitability, using all capability to work any M&A possibility, to maximize the profit by reducing the cost. That means when where yesterday three people were needed for a certain job, today has to be done by two.
Regarding the Italian market, at the beginning of December all the mills were in a hurry to receive scrap and a lot of them were willing to pay higher prices. Consequently the prices on the domestic market moved up around 10 €, with some peaks of 20 €. The contracts on monthly basis with the European suppliers have been settled with 10 €increase. During the second half of the month the operations have been conditioned by the seasonal limitation in the railway deliveries, the holidays and the consequent closing of the mills production.
The arrivals at the Italian ports in December were very important: abt 56 Kt the scrap, abt 165 Kt the pig iron and abt 120 Kt the HBI. Thanks to the vessels arrival and the lower December consumptions the mills inventories at the end of the year were better recovered that the previous months. The scrap yards inventories are always reported low, due to the difficulties in the scrap collection. The suppliers report also some delays in mills payments.
Following the December official average prices reported (€/pmt delivered):
New arising E8:
Demolition scrap E3:
January`s real activity will start Monday 11th, when nearly all the mills will return to the production. The general feeling is not positive, and the prices could be influenced by some reductions, moving not to far from November level.
It is necessary to spend some words about ILVA, because the next six months will be decisive for the Company. The Government launched, by another Decree, the end of February as the deadline for the purchase (or rent to buy) letter of intent of the Company and the 16th of June as the deadline for the deal with the potential Buyer/s. With the same decree the deadline for the cleaning up and revamping works has been delayed till June 2017 (instead of December 2016), with additional 800 million € made available for these works.
PIG IRON – H.B.I.
The HBI arrivals at the Italian ports during December have been two cargoes from Venezuela and one large vessel from Black Sea. Last HBI offers are reported around $ 175/185 pmt CIF Italy. Also the December pig iron arrivals increased up to about 165 Kton, all from the Black Sea ports. The pig iron offers are now quoted around $195/205 pmt CIF for February shipment. The inventories at ports and mills remain well recovered.
Source: Alocci Rappresentanze Industriali