Steel market players consulted by SteelOrbis are concerned over the result of the Italian parliamentary elections which took place on February 24-25. In the absence of a clear majority, it will be harder for Italy to pass the reforms it needs to overhaul its debt-laden economy. The anti-establishment Five Star Movement (M5S) led by former comedian Beppe Grillo won 25.5 percent of votes for the Chamber of Deputies but has vowed not to go into government with any of the main parties, leading to fears of a political stalemate and economic turmoil if none of the other parties manage to form a viable coalition. Grillo is also committed to holding a referendum on leaving the euro and implementing a temporary freeze on interest payments on government bonds, which could lead to default.
In conclusion, weeks could be necessary for political leaders to reach agreement on a grand coalition that would be able to govern the country. Nothing will happen officially until March 15 at the earliest when the Italian parliament will be formally convened. Market players are very worried by this uncertain situation. Another election could be held relatively quickly in the hope that the results would put a party in a stronger position to form a government, but this cannot happen during the last six months of a president's term, with current incumbent Giorgio Napolitano due to leave office on May 15. The current situation revives fears over the euro zone debt crisis, with prospects of a long period of uncertainty in the zone's third-largest economy.