Italian steel market report: June has been another month of calm

Stahlschrott (Foto: Marc Weigert)

Genoa, Italy — Two events characterised the last warm week of June in Italy, both of them related to the steel and scrap business. The first is the full closure of the Fincantieri Monfalcone shipyard due to the preventive seizure of some production areas ordered by the Criminal Court of Gorizia for alleged environmental crimes. The areas involved are those intended for shorting and processing residues, mainly ferrous and metals scrap, before they are collected by the scrap recyclers. This means that waste/scrap is always one of the targets of the Italian Judiciary; unfortunately the legal-bureaucratic complication of the country opens the space for this type of behaviour. The second event is the seizure of the Ilva Taranto BF 2 ordered by the Prosecutor’s Office due to the on-the-job injury and consequent death of a worker.

Both these events had such strong consequences on the effectiveness of the two companies that the Government produced an urgent Law by Decree to order the immediate release of the Monfalcone areas and the Taranto BF 2. For ILVA it is an open-end history. Indeed the new Law by Decree is the eighth passed by the Governments for Ilva in the last two years. But Ilva’s several troubles are still not solved: The steel production is restricted at least to 40 percent of the plant capacity, the revamping and cleaning up operations are constantly late and there are several doubts about the company’s ongoing profitability – a very big headache for the biggest Italian steel producer.

June has been another month of calm not just in Italy. Prices remained essentially unchanged on the domestic market and also for the contract settled with the European suppliers, with only very small adjustments reported. Deliveries have been enough to cover the quantities ordered, and the mills inventories are stable, even if arrivals of metallic raw materials at the ports were lower than the previous months: abt 10 Kt for scrap, abt 70 Kt for pig iron and abt 70 Kt for HBI. Stefana is still out of the market, while Lucchini Piombino is preparing the rerolling restart of blooms and billets supplied mainly by deep-sea market. Flat product prices are still under negative pressure due to the import from China. Also the close start of steel deliveries from Iran is calming down the prices. Long products for automobile and mechanical applications are doing well, as are the profiles and beams. Some quantities of Chinese billets for rebars have been purchased by the mills at cheaper prices than their home production with scrap.

Following the June official average prices reported (€/pmt delivered):

New arising E8:
Italy 250
France 257
Germany 257

Shredded E40:
Italy 258
France 262
Germany 262

Demolition scrap E3:
Italy 240
France 237
Germany 237

July and August scrap prices are influenced in Italy by the long Summer mills stop, foreseen in the average of four weeks, but with some extension up to six weeks. The Turkish buyers are also expected to return on the market after the Ramadan, and the general negative sentiment of the long products will influence the current scrap prices. Scrap prices have seen with possible 10/15€ reduction both for the domestic and the import from the European suppliers. All this is subjected to the possible and not foreseeable market reactions at the Greek bailout.

Pig Iron – H.B.I.

The pig iron quantities received in June have been one of the lowest of the year. All of them were from the Black Sea ports. The last pig iron offers are quoted around $280/285 pmt CIF, for July/August shipment. The HBI vessels arrived in June were from Russia, Venezuela and Libya. HBI offers are now reported around Usd 250/255 pmt CIF Italy.

Source: Alocci Rappresentanze Industriali