Genoa, Italy — The slump of iron ore and crude oil prices (followed by other commodities) has influenced the BRICS economies in different ways. Some of them like India, but also South Korea and Taiwan, are maintaining a high growth rate, taking advantage of the low prices of raw materials and energies. Others, like Russia, Brazil and South Africa are suffering for the fast and heavy cut on the value of their main export flows. And finally there is China, today near to a possible hard landing, due to the sudden cooling of the real economy.
The steel makers are involved in this scenario in different ways. There is better demand in India and another few countries, where however several barriers are conditioning the fair and free trading of – among others – the metallic raw materials, but also a lower steel consumption in the other BRICS. China, the main steel producer, user and exporter, is showing some difficulties in the domestic growth with the result of some cuts in the steel production capacity. The USA, which are rewarded by the strong job done by the Federal Reserve, are increasing their steel production and consumption (always protected by the Buy American act), while in Europe the first positive but fragile signals of recovery are driving the steel production towards a slow increase.
At the beginning of February, Italy saw a heavy fight between the mills buyers and the scrap suppliers. The buyers’ will, to reduce their purchase prices following the international market trend, collided with the South Europe dealers’ lower scrap availability and the better demand of some domestic and German mills. At least the domestic prices moved down 5€ twice in two weeks while the monthly contract from the European suppliers was settled with 5/15€ reductions, depending on the grade and on the end-user. It means that these prices do not follow the fall of the Turkish mills purchase prices in US$, even if the gap is now reduced at about 15€, assuming the today €/Us$ rate.
It is important to point out that the lower scrap collection is due not only to the winter conditions, but also to the reduced generation, especially for the low grades. Stefana, Lucchini Piombino and Ilva Taranto are always out of the market. The deliveries to the mills are still late from the foreign suppliers, due to several disruptions of the railway services. The arrivals at the Italian ports have been abt 32 Kt for scrap, abt 125 Kt for pig iron and abt 48 Kt for HBI. At the end of the month the inventories of some mills are well recovered, but others are short.
Following the February official average prices reported (€/pmt delivered):
New arising E8:
Demolition scrap E3:
The forecast for March is oriented towards further prices reductions to balance the international prices. Some better signals in the economies and steel demand, the coming end of the winter, some bounces in the Turkish steel and scrap prices will soften this trend.
Today the Italian Parliament passed the legislation over the „new“ Ilva, making available more than two billion Euro for the cleaning up operations and for revamping the company production and profit margin, before the future sale to a new buyer (within 36 months). Several suppliers of the „old“ Ilva are still fighting to get their money, making the day-by-day activity at the Taranto, Genoa and Novi plants difficult . The general maintenance of the blast furnace n 5 (scheduled in the next weeks) and the delayed revamping of the BF1 are reducing the steel production at a foreseen output of 10/11 kton per day, instead of the current 16 Kton. It means that less metallic raw materials is needed, a temporary standby of about 5.000 workers and more space for the coils import in our Country.
PIG IRON – H.B.I.
The pig iron arrivals from the Black Sea ports have been always high, not conditioned by the Ukrainian events. With this the inventories remain well recovered. The last pig iron offers from Black Sea ports are quoted below $320 pmt CIF, for April shipment, with some price „indication“ also below the wall of $300. One HBI vessel from Venezuela and a second one from Oman arrived at Taranto early February, where the discharge operations take always longer and longer. Offers for February shipments are reported around US-$ 320 pmt CIF Italy. No arrivals came from Libya due to the political instability in the country, which is decreasing all the Lisco outputs.
Source: Alocci Rapprasentanze Industriali