Genoa, Italy — Despite the number of Countries in conflict involved seems to grow each month, the iron ore price is looking weaker than ever worldwide showing the lowest since October 2009. Usually when a global instability is such as this, commodities gain strength, but not in this case. The main reason of the lower iron ore prices is the drastically increased production by the three big global players during the first half of the the year and, at a lower level, the increase in deliveries of other small worldwide producers. The expected rise in the iron ore consumption by the Chinese producers (+3/5% in 2014) is today close to zero and it seems to be falling year-on-year during the second half of 2014.
Prices below 75$ for the 62% Fe content will hurt especially the smaller and higher cost miners and, as a consequence, all that will reduce the output, making the prices in the short future more stable. The other metallic raw materials like ferrous scrap, basic pig iron, DRI and HBI are not driven lower by weaker iron ore price, being affected more by the political turmoil and being always well supported by the better demand of the EAF producers.
Only a few words about Italy are necessary on July and August as two very flat months. After the long summer holidays with more than three weeks on average, the Mills are now restarting the production, without any relevant change in the volumes. Prices during July and August moved up slowly, around 5€, both from the domestic and the main European suppliers. The deliveries to the mills coming from the domestic market have been important before the recycling summer closing in July, while during August they came mainly from the European suppliers.
The arrivals at the Italian ports in July have been abt 50 Kt for scrap, abt 82 Kt for pig iron and abt 6 Kt for HBI and in August abt 18 Kt for scrap and abt 65 Kt for pig iron. The mills inventories have now recovered enough, also considering the always low demand of finished products. The domestic scrap dealers are fighting day-by-day with the low scrap generation and the strong competition, the delayed mills payments and the always more and more compressed margins. These are hard times for recyclers.
Following the August official average prices reported (€/pmt delivered):
New arising E8:
Demolition scrap E3:
The deals for the September contracts have started with the aim, from the buyers side, to reconfirm the August price level. The sellers are trying to get some 5/10€ more for the new contracts and the fight will be hard during the next days.
Some more info about ILVA Taranto: The new Public Commissioner nominated the new management team – four of which over a total of five are new entries. They are now working for the new business plan, looking for new fresh finances from the banking system and developing the clean-up / revamping operations as according to the timeline signed with the Italian Government. Production in July and August has been further reduced due to a couple of technical failures of the power generators and other plants, now solved.
PIG IRON – H.B.I.
The Russian – Ukraine uprising is also lowering the pig iron production and therefore the deliveries to the Italian ports. Anyway the inventories at ports and mills remain well recovered, due to the previous months strong arrivals. The last pig iron offers are quoted around $410/420 pmt CIF for September / October shipment. Nearly forgettable are the July and August HBI arrivals, because of the well noted Libyan and Venezuelan turmoil and some maintenance in Russia. Last offers for the Libyan production are reported around Usd 375 pmt CIF Italy.
Source: Alocci Rappresentanze Industriali