Genoa — Talking with steel mills, the main question of scrap recyclers and traders is: What changed in the steel chain fundamentals during the last couple of months? Several of them answered: „nothing“. It means that the strong rebound on metallic raw materials and steel products prices is apparently without any clear explanation. Certainly one can see once again several troubles on the way.
China said last week that antidumping tariffs from 14 to 46 percent would be applied to steel producers from Europe, Japan and Korea to defend the country from unfair trade. At the same time USA and Brazil are in talks to find common barriers to limit the Chinese steel export in their countries. Also the European parliament is working for some measures of protection for the EU steel producers. In Britain Tata wants to sell its steel operation plants. In Brazil tens of thousands workers are droping out from the steel field.
Looking at the worldwide economy, the Capex Efficiency Index (capital expenditures) has been now reported at the same (lower) level of 2006, mainly driven by the reduced investments in oil & gas and mines, planned for this year and the next one. The barrel price is always rising and falling around 40 US-$, in spite of the producers’ efforts for increasing the average price around the 50 US-$. In the end, the origin of the metallic raw materials rebound could be simply explained by the clever policy of the main iron ore producers that, bearing low prices for some months, cleaned the market from several competitors and now are in a better position to work with higher prices and traded volumes.
In Italy, march has been characterized by the better mills order books, mainly due to the restart of the rebars export to Algeria and the increased demand from the steel service centers for rebuilding their stock. The resulting higher capacity utilizations and the lower mills scrap inventories boosted the raw materials demand and consequently the prices. On the domestic spot market they rose around 15 €, with some peaks of 20 € during the second half of the month. The contracts with the European suppliers have been settled with the average increase of 15 €, basically going back to the January level. The arrivals at the Italian ports in March were abt 8 Kt for scrap, abt 45 Kt for pig iron and abt 185 Kt for HBI. During the Easter holidays the mills stopped their production for less than a week. At the end of the month the mills inventories remain lower than the full capacity.
Following the March indication of the average prices paid (€/pmt delivered):
New arisings E8:
Demolition scrap E1/E3:
Right after Easter, the mills started the deals with their suppliers for the April contracts.The forecast are always focused on more increases in terms of prices and volumes, both supported by the low scrap inventories and the steel production. Anyway the main driver is the Turkish market, where demand and prices are always strong.
Some words about ILVA. In April there will be the first answers from the potential buyers about their final proposals/offers, after the data room. Even if with continuous delays, cleaning up and revamping works are always in progress. Some increases in the steel production are reported and also better order books than in the previous months.
PIG IRON – H.B.I.
New record numbers for the HBI arrivals at the Italian ports in March: With about 185 Kt, they were the highest ever seen. The cargoes were from Black Sea, Venezuela and Libya. Last HBI offers are reported over 200 $ pmt CIF Italy, with a strong increase. The pig iron arrivals were one of the lowest ever seen: around 45 Kton. All the quantities were from the Black Sea ports. The pig iron offers are now quoted around 260 $ pmt CIF for May shipment, something over 300 € delivered to the mills. Anyway the inventories at ports and mills remain well recovered.
Source: Alocci Rappresentanze Industriali