Scarcity of material is proving to be the Achilles' heel of the billet market in Italy at the current time. Players in this market report that it is difficult to find the semi-finished products necessary for the continuation of daily production activities, whether from domestic or from overseas sources.
The cause of this scarcity of billet must be sought in the growth in consumption levels in regions such as North Africa, the Persian Gulf, the Middle East and the CIS. Demand for long products in these regions is having two principal knock-on effects: first of all, the establishment of numerous rerollers who are benefitting from the booming construction activity; and, in the second place, a reduction in billet exports from traditional suppliers, who now prefer to produce finished products from their own billets and sell them to their famished internal markets. The combination of these two factors has caused a reduction in availability of billets in Europe and in Italy, in turn resulting in a strong upward shift in billet prices. Base prices for billets for rebar production are now hovering at around $1,200/mt and still appear to be subject to upward pressure. Prices in Italy would seem to be in line with levels in the international markets (where maximum fluctuations in the range of $50-70/mt are seen); in the European Union, however, a greater gap may be seen between the maximum and minimum levels of offers.
The overall situation as described above, and especially the issue of billet scarcity, is causing great difficulties for longs producers in Italy, as end-side demand is not great and as profit margins are on the slide.