In the last two weeks, the flat steel market in Italy has seen a significant drop in prices, with a decline of about €60/mt deriving from weak demand from end-users and from the impasse in the automotive industry. In addition, there are considerable difficulties on the export side, which is hampered by the downturn in the MENA (Middle East and North Africa) markets and the strength of the euro against the US dollar. On the other hand, among the most immediate consequences of this last factor should be noted the increased pressure from imports, resulting in further downward pressure on Italian domestic prices. The overall situation is much the same, though with more moderate declines, for cold rolled and hot dip galvanized coils in Italy.
Currently, in the Italian flat steel market, local base prices for hot rolled coils (HRC) stand at around €520-530/mt ($772-787/mt) ex-works, while cold rolled coils (CRC) and hot dip galvanized coils (HDG) are respectively at €610-620/mt ($905-920/mt)ex-works and €590-600/mt ($876-891/mt) ex-works.
Many market players are wondering whether this phase of decreasing prices is already close to the bottom or if there is room for further downward movement. In favor of the former, there are those who claim that steel mills cannot reduce their prices further, as prices of raw materials are relatively firm - especially iron ore prices - and profit margins are already narrow. Those who believe there is a possibility of further cuts in prices mention that the major local steelmakers are trying to focus on volumes as much as possible and on stimulating market demand rather than increasing their profit margins.
Internationally, in addition to the tensions in the MENA countries which are significantly slowing down the activities of Turkish steel suppliers, the markets also suffer from the tight monetary policy implemented by the Chinese government in order to contain inflationary pressure. In this context, Baosteel and Anshan Steel have reduced their prices for May.
Finally, most of the market players consulted by SteelOrbis believe that in the coming weeks flat steel prices in the Italian market will continue to fluctuate. In the meantime, flat steel producers from Turkey and the CIS are expected to increase their offers in May. If this happens, it may lead to a recovery in the Italian domestic market.