Genoa, Italy — At the last IMF and ECB meetings it came to light that the global growth could be weaker for longer than expected, despite the very low interest rates, especially in Europe. Also the Chinese economy is showing several signals of vulnerability. The recent reports and rumours of the markets are confirming the possible defaults of some Chinese steel makers, with the effect of lower production. Worldwide steel production, even if heavily conditioned by the negative economic sentiment, is still showing a positive growth of the 2.4% during the first eight months of 2014, according to the last WSA figures.
After the summer, something seems worst as all the metallic raw materials prices are declining. Daily spot iron ore prices fell below $80 and the purchasing activity will inevitably slow down over the next weeks, also due to the long October Chinese festival time. Also ferrous scrap prices are declining being the fourth quarter usually a depressed period for EAF long production, in particularly for billets and rebars. In this situation the steel makers are reluctant to buy until the bottom is established, postponing their purchases. It means that some rebounds in prices could be possible in November, when mills inventories will be lower than today. Dull and weaker the capsize freight market as iron ore and coal volumes fail up to the expectation. The abundance of prompt tonnage in Far East and the lack of activity in the Western hemisphere will influence the freight rates also in the next weeks.
Talking about September, here in Italy, we can split the month in two. A strong sellers’ pressure for higher prices, only partially accepted by the mills, has influenced the first 10 days. After this small fire the market returned fully in the buyers’ hands and prices recovered the previous level. On the weekly domestic market, prices continued to move down also at the end of the month, opening a negative scenario for October contracts. Prices on the monthly contracts from the European suppliers moved slightly up to 5€. The deliveries to the mills coming from the domestic market have been important even if the recyclers are affected by the long payment terms and the strong competition to gain the low scrap available. The arrivals at the Italian ports during September have been abt 37 Kt for scrap, abt 115 Kt for pig iron and abt 93 Kt for HBI. The mills inventories remained well recovered and balanced to the always low demand of finished products.
Following the September official average prices reported (€/pmt delivered):
New arising E8:
Demolition scrap E3:
For the October contracts the mills buyers are waiting for a significant drop in prices, following the
international trend. Some info about ILVA Taranto: the Public Commissioner asked the Judiciary Court for the authorization to use the 1.2 billion € confiscated to the Riva family to finance the cleaning-up and revamping works. At the same time the meetings with possible buyers are carrying on, with the objective to define a new ownership in the shortest future. It seems that Ilva will be divided in two: a “bad company” charged with all the environmental issues and claims and a “new-co” to be offered on the market at the best conditions possible. Steel production advances always slowly.
PIG IRON – H.B.I.
The pig iron arrivals have been better that the previous months due to the return of the Brazilian pig iron on the Italian market, to balance the lower Ukrainian availability. The inventories at ports and mills remain always well recovered, also due to the lower consumption. The last pig iron offers are quoted around $420/425 pmt CIF for November shipment. Also the HBI arrivals have been important thanks to the large quantity imported from Russia and a shipment from Libya. Offers for October shipments are reported around Usd 375/380 pmt CIF Italy.
Source: Alocci Rappresentanze Industriali