Genoa, Italy — May is the third month in a row characterized by a strong escalation of the metallic raw materials prices, mostly for the ferrous scrap ones. It looks like positive for all the steel industry and recycling operators, but it is not clear if the branch is facing different fundamentals, compared with the ones some months ago. It is necessary to find an answer to the question: “How long could the current rebound be sustained?”, as the rebound is contrasting with the continuing negative economic forecast of the International Monetary Found and the European Central Bank.
An example explains the discrepancy between the steel price rise and the economic fundamentals: During Q1/2016, the first three South Korean shipbuilders got only three new orders and none in April. In the past they received up to one hundred orders each quarter. It means that the use of steel in one of the most important worldwide business is quite collapsed.
In Italy, the April deals followed the weekly prices run, with the background of the growth of the Turkish import price at one side and the end-users needs at the other. At the end of the month the scrap prices rose around 30 €, pushed also by the better demand in terms of volumes of the domestic steel mills. Also the prices of the monthly contracts, settled with the European suppliers, rose around 35 €, but the quantities offered have been lower than the mills expectations. The arrivals at the Italian ports were abt 3 Kt for scrap, abt 60 Kt for pig iron and abt 30 Kt for HBI. At the end of the month the mills inventories remain at lower level.
Following the April indications of the average prices paid (€/pmt delivered):
New arising E8:
Demolition scrap E3:
May started with rumours from suppliers about new strong price increases for the metallic raw materials, supported by the Turkish prices, the lack of scrap at the yards and at the ports involved in the export to Turkey and a general better demand of the European end-users. Also the increased prices of the steel products are supporting this situation, but it seems not possible that the increases on the raw materials can be higher compared to ones of the steel products.
News about ILVA: The deadline for submitting the final offers for the businesses owned by Ilva SpA has been postponed to the end of May. At present there are rumours about two different groups of interested companies, one made by ArcelorMittal and Marcegaglia group, the other made by Erdemir, Delfin (family holding of Mr Del Vecchio – Luxottica) and Arvedi. Both groups will be supported in the offer by CDP (the State controlled investment bank Cassa Depositi e Prestiti). The offers seem to be orientated on the business lease, waiting to know how the very complicated Ilva judicial situation will end.
PIG IRON – H.B.I. A
After the strong volumes received in March, the HBI arrivals came back to the standard level of about 30 Kt, all from the Black Sea ports. Last HBI offers are reported over 240$ pmt CIF Italy, with another strong increase. The pig iron arrivals were again low, around 60 Kton, including a small parcel of foundry grade received from Brazil and about 10 Kton delivered from Arvedi Monfalcone plant to Ilva Taranto (first time). The pig iron offers are now quoted over $310 pmt CIF for June shipment. The inventories at the ports and mills have appreciably decreased.
Source: Alocci Rappresentanze Industriali