Demand in the Italian flat steel market has lately weakened following a good start to the current year. The reduced booking activity is due to the lower sales performances of downstream sectors, such as mechanical engineering, automotive and construction.
According to market operators, this situation of reduced demand does not come as a surprise, since the local flat steel market is still trying to exit the crisis which began in late 2008. Demand remains very sensitive to changes in the mood of market players. Nevertheless, flat steel prices in Italy have not changed much in the last week, and the steelmakers themselves are very cautious about issuing offers, preferring to monitor the global market with great care before deciding their price policies. Market insiders tend to exclude significant price reductions in the near future, mainly due to the ongoing strength of raw materials, such as iron ore, coke and, indirectly, oil.
Currently, in the local Italian market, hot rolled coil (HRC) base prices stand at €620-640/mt ($857-885/mt), while cold rolled coils (CRC) and hot dip galvanized (HDG) coils are respectively quoted at €700-720/mt ($968-995/mt) and €700/mt ($968/mt).
SteelOrbis has heard that HRC offers given to the Italian market for new production material stand at €630-640/mt ($871-885/mt) CIF; however, buyers have been showing greater interest in ready stock material at Italian ports. At Italian ports, HRC sales have been concluded at €600-610/mt ($830-844/mt) ex-warehouse. On the other hand, it is reported that an Italian producer concluded a high volume HRC transaction from Turkey last week.
On the other hand, Indian offers to the Italian market for 0.6 mm pre-painted galvanized iron (PPGI) stand at €830/mt ($1,148/mt) CFR, while offers for HDG coil stand at €745/mt ($1,030/mt) CFR. In the meantime, SteelOrbis has learned that Chinese HDG coil offers to Italy are at €690-710/mt) ($954-982/mt) CFR; however, demand for this price range had recently regressed as compared to previous months.
Apart from issues related to demand, offers and prices, at the current time Italian flat steel service centers have to face financial problems, i.e., high debts and low liquidity, also taking into account that the banks are more and more cautious in giving credit. As a result, steel companies are forced to reduce their restocking activities.
€1 = $1.383