The price increase that ArcelorMittal announced last week in the European flat steel market will only help to stabilize prices, but will hardly be able to support a price recovery, according to Tommaso Sandrini, chairman of Assofermet Acciai, the steel service center and distributor division of Assofermet, the Italian association representing steel and scrap distributors in the local market.
Mr. Sandrini told SteelOrbis that the ArcelorMittal announcement was justified by the increasing trend of raw material costs compared to last year, which is currently penalizing steel producers. However, demand remains low. "Nowadays there is no industrial sector in Italy or in Europe that is showing a clear upward trend. The weakness is generalized and concerns the automotive, mechanical, construction, home appliance, and machinery sectors," explained Mr. Sandrini.
He went on to state, "Paradoxically, it is not imports that are pushing down prices in Europe, but the lack of demand. The increase announced by ArcelorMittal will probably serve to stop the declining trend, perhaps it will even help boost prices slightly, though I doubt they will increase by €30/mt".
The president of Assofermet Acciai also commented on the request made by the European Steel Association (EUROFER) to the European Commission not to proceed with the five percent increase in EU safeguard quotas on steel product imports. According to Sandrini, it is probably true that the European market will grow by less than five percent, and for this reason EUROFER's request appears to be justified. "However, considering how quotas are calculated by the European Commission, the theoretical nominal quota is never used up to 100 percent. When the critical level is reached, i.e., 90 percent, imports slow down very sharply", Mr. Sandrini explained. He added that Assofermet Acciai hopes that the safeguard measures are not continuously changed as it would create uncertainty in the market, which would not allow market players to operate well.