Italian flat steel market relieved as Ilva will remain open

Before the start of the summer holiday in Italy, Italian flat steel producers announced a price increase of €20-30/mt ($25-37/mt) for hot rolled coils (HRC) and a rise of €10-15/mt ($12-19/mt) for cold rolled coils (CRC) and hot dip galvanized (HDG) coils, for September and October deliveries, despite little chance of the Italian flat market to show any positive movement during the summer holidays. However, as the market waited for a final statement on the future of Taranto-based Ilva whose partial closure was ordered by a court ruling in late July, the prices increases were not fully implemented in the last orders placed before the summer halts.
 
Yesterday, August 7, an Italian court ruled that Ilva should upgrade its production to meet regulatory environmental standards, while Ilva chairman Bruno Ferrante said production would continue while improvements are made. This is expected to provide some relief for the European flat steel industry, as Ilva produced 6.5 percent of the EU's total steel output last year with its total production capacity of 11.5 million mt. Even a partial closure of the plant would have created a serious supply shortage.
 
While flat steel price increases only have been reflected partially in the Italian market, not exceeding €10/mt, the mentioned court ruling regarding Ilva has ended fears of rapid price increases in late August or early September arising from possible supply shortages. Besides, Italian flat steel producers may again start to accept orders from outside Italy, as they were not accepting any export orders until it became clear whether Ilva would continue its production.
 
Last week, HRC base prices in the İtalian domestic market were standing at €490-500/mt ($608-620/mt), while CRC prices were at €560-570/mt ($694-707/mt) and HDG prices were at €540-545/mt ($670-676/mt), all ex-works.
 
The outlook for September is cautiously optimistic, as stated by flat steel service centers' sales representatives consulted by SteelOrbis. They state that just recently the order intake for September shipments has picked up a little and, if improvements continue to be seen also after the holidays, then the price increases targeted by flat steel producers will likely gain acceptance.
 
€1 = 1.24