Genoa — Looking at China, the main steel producer in the world, after more than 30 years of steel production growth, 2015 will be the year of the first cut in the steel output. As construction works are not so large as the previous years and higher exports are not enough to balance the domestic demand, steel production is lowering. Iron ore and energy prices are driving down the steel prices and it seems that there is no price bottom at all in China.
As a consequence an increasing number of mills, trading companies and steel chain operators is going bankrupt. At the same time the Big Four iron ore producers are ready to put into the market other 200 million ton of iron ore during the next five years, after the very strong increase of the last two. It means that the iron ore prices will maintain the current trend for long time, influencing the other metallic raw materials prices. In spite of the fast and strong fall the scrap prices are always more than four times the iron ore ones.
After some mills opposition to increase the scrap prices with the beginning of January, the weekly contracts on the domestic market In Italy have been settled with 5/10€ increase during the wk2. The prices remained unchanged until the wk5, when some 5€ reduction have been done, following the deep-sea market movements. The monthly contracts from European suppliers have been settled in the range of plus 5 to 10€. The domestic scrap collection is always low, and the winter seems to have arrived with snow and low temperatures. Lower than usual was also the mills demand being Stefana, Riva Verona and Ilva always out of the market. The deliveries to the mills are a little bit late, mainly from the foreign suppliers. The arrivals at the Italian ports have been abt 30 Kt for scrap, abt 150 Kt for pig iron and abt 20 Kt for HBI. The mills inventories remain well recovered.
Following the January official average prices reported (€/pmt delivered):
New arising E8:
Demolition scrap E3:
The February prices are mainly conditioned by the strong reductions in the domestic USA market, as much as the success of the Turkish buyers in getting lower prices for their import. Even if we can see some differences in the EU market against the USA, certainly prices will be reduced, but there will be needed some more time to adjust our prices to the present USA level. Riva is restarting the operation at the Verona mill, even if at half capacity. In terms of scrap demand it means a small monthly increase.
Accoring to Alloci, the so called Ilva “disaster” not only referred to the environment but also referred to the negative economic consequences of the Commissioners management of the company, from 2012 up today. The Minister of Economic Development Decree dated the 21st January admits Ilva Spa to the procedure of Extraordinary Administration. Three extraordinary Commissioners have been appointed for the management of the group and a new General Manager has been nominated the 2nd of February. In this situation several Ilva suppliers are no longer covered for their payments from the “old” Ilva, a disaster for hundreds and hundreds of small and medium size companies. Right now the Italian Government is issuing a new decree by which the company will be managed for at least 36 months under the State control. The aims are: to continue the cleaning up operations, to revamp the company production and profit margin, to protect the direct and un-direct jobs (more than 20.000 heads) and to sell the company if a buyer will be found.
Pig Iron – H.B.I.
Always important are the pig iron arrivals, basically from the Black Sea but also from Brazil. The inventories at ports and mills remained well recovered. The last pig iron offers from Black Sea ports are quoted around US-$ 345 pmt CIF, for March shipment. The strong revaluation of the US dollar against the Ukrainian and Russian currencies will lower further this price. Only one HBI arrival has been reported (from Libya). One vessel from Venezuela and a second one from Oman are moving to Taranto for early February arrival. Offers for February shipments are reported around US-$ 340 pmt CIF Italy. The political instability in Libya associated with the drop of oil and gas extraction, have reduced the power supply in the country, decreasing also the Lisco DRI/HBI output.
Source: Alocci Rappresentanze Industriali