The return after the holidays in the Italian flats market at the start of 2007 cannot be said to have been overly exciting. According to market players, in the first few weeks of the year, demand has continued at levels that are not very high, while prices have been giving contrasting signals.
Currently, the demand of end-users is below the norms for this time of the year. The reason for this drop should be sought in the decline in prices seen in recent weeks. A further fall in price quotations is expected, and so the purchasing activity of consumers is characterized by extreme caution at the moment.
While cold rolled has suffered the most, the situation of hot rolled and hot dip galvanized appears somewhat better. Also, apparent demand has leveled out and at the present time is at the same level as real demand.
Looking at the flats price situation in Italy, two different stances are observed. On the one hand, the steel mills are seeking to keep flats prices stable (especially for hot dip galvanized), while the service centers, due to strong downstream competition, are making concessions on prices to buyers, pushed by the weak demand. For the weeks ahead, market players continue to wait in anticipation for signals from the producers. In particular, the negotiations next week for April deliveries will be of crucial importance in order to be able to understand better the trends of the coming months.
As regards the international markets, the strengthening of the dollar against the euro and the increase in Chinese prices may contribute to lessening the pressure on the European market from non-EU countries.
According to a survey of Italian service centers regarding the flats market, December saw less sales than the month of November. 67 percent of respondents stated that sales volumes had dropped, for 22% sales were stable, while just 11 percent recorded an increase in sales. Compared to their sales volumes for December 2005, 56 percent registered a drop, 11 percent didn’t see any change, while 33 percent experienced a rise.
With regard to the month of January, 89 percent of respondents said they expected an increase in sales volumes, while 11 percent said that they expected their sales volumes to continue at the same level. The average level of daily sales recorded by the service centers in December was inferior to that of November for 56 percent of respondents.
For January, 44 percent of service centers said they expect the sales situation to improve compared to December. As regards inventory levels, 78 percent said that they saw an increase in December, while 67 percent expect stable levels in January.
Prices are still taking a beating. In December, quotations – both for purchases and sales – varied between stability and decline. A continuation of the same trend is expected for January.