Italy risks becoming the first target market for steel overproduction in emerging markets, said Tommaso Sandrini, president of Assofermet Acciai which represents Italian steel distributors. In an interview published in the Italian business newspaper "Il Sole 24 Ore", Mr. Sandrini expressed his opinion on the impact that the crisis at the former Ilva steel company will have in the short and long term on the Italian and the wider European steel markets.
First of all, he stressed that the market has not been sitting on its hands and that in the past ten days "we have all moved quickly to cover our positions with other operators". In the short term, the Italian distribution system should be able to compensate for the negative effect of the events linked to the Taranto plant, which in recent days have caused a price increase of at least eight percent across Europe. What is certain is that producers like Tata Steel, ThyssenKrupp, SSAB, Salzgitter and ArcelorMittal itself will take advantage of the absence of Taranto to increase their sales to Italian consumers. "Fortunately, we have diversified among several operators, and we are not Ilva-dependent, as is the case for example of ThyssenKrupp, which is the dominant supplier in Germany", he explained.
However, the situation could get worse within three months. Italy is the second country in Europe for steel consumption and, if only Italian producer Arvedi were to remain (with a production of 4.5 million mt), domestic demand could not be met. "Remaining without a domestic operator that sees in the domestic market its supply core would be damaging for the entire supply chain, even more so if the negative cycle were to reverse" said Sandrini. According to the Assofermet Acciai president, "Not being able to count on a supplier that sees in the Italian market its main market is a problem, both for the continuity of supply and for prices". The strong risk is that of becoming "subordinates to foreign operators". Steel processors and end-users will also have to make greater use of imports from third countries, and doing so they will have to deal with the EU safeguard on steel imports. He also recalled that "in many cases the safeguard quotas have already reached their maximum levels" and added that he expects Italy in the European context "to be the country that will absorb the largest share of import material from outside Europe."