The picture of the Italian flat products market still remains complicated, even if forecasts for a recovery have been made for the first quarter of 2007. In the past few weeks, sales quotations have decreased in the local market due to a variety of causes. The first cause is the massive inflow of material from non-EU countries. The increase in imports (mainly from China) concentrated between the end of August and October induced a great increase in supplies from distributors. The increase in offers from service centers caused a rise in competition in the market, with negative consequences for quotations.
As a result of the decrease in the mills' offers in the first days of September, dealers had feared that there would be another contraction in quotations. Distributors had their warehouses loaded with material acquired at high prices, and were obliged to make a push on sales to the detriment of margins. This phenomenon has been particularly obvious in Italy, while in the other European states (Spain, Germany and France in particular), the fluctuations in sales quotations has been much more contained. Currently, the flat market still appears unsettled, with different prices being given by different traders. The demand towards the end of November, after a positive October, resembles the level of the same period of 2005.
In the steel sector, the optimism of data indicating an economic recovery contrasts with the pessimism found two months ago. Between now and the end of the year, dealers expect a decrease of the inflow of materials from non-EU countries. In fact, traders, after having accelerated purchases up to July, subsequently reduced orders from non-EU steel mills. A further decrease in Chinese exports may be seen in 2007.
The Chinese fiscal reform which reduced the export tax rebate, joined to the decision of the Chinese government to close converters of less than 300 cubic meters and electric arc furnaces of less than 20 cubic meters, is also likely to lessen offers to the European market from the Chinese steel mills. In the next few months the prices of the steel mills may be oriented towards stability, with possibly a slight increase for deliveries for the February-March period.
Hot rolled As regards hot rolled, currently prices are less than the higher levels of one year ago – less 50 euro/mt for lower quality products, less approx. 20-30 euro/mt for qualified products from non-EU countries, and less 10 euro/mt for the products of European steel mills. The slide in quotations seems to have stopped. For the first quarter of 2007, the forecast is that the European mills will try to increase quotations. Meanwhile, imports from non-EU countries are expected to register a slowdown between November and January.
Cold rolled Cold rolled has endured a bigger decrease than hot rolled, coming down Euro 70/t in relation to September levels. The shift in contracts with the automotive industry and the decrease in demand from electric household electric goods producers have meant an increase in the availability of material on the market. The result has been a price decrease, especially in products of inferior quality.
Galvanized The explosion of the zinc price has maintained galvanized quotations at high levels. The insufficient availability of material that had characterized the market in the first half of the year is no longer a problem now.