In the last two weeks, the Italian flat steel market has witnessed a further deterioration. Domestic flat steel prices have failed to see any upturn, but have instead continued to slip down slowly due to weak local demand and a lack of orders. Service centers, in particular, are not able to generate profits, and in general all Italian steel companies are struggling under pressure from low profit margins and soft raw material price trends.
Currently, Italian producers' flat steel base prices are at around €420-430/mt ($554-568/mt) for hot rolled coils (HRC), at €500/mt ($660/mt) or slightly more for cold rolled coils (CRC), and at €480/mt ($634/mt) for hot dip galvanized (HDG) coils, all ex-works.
Besides the known issues (strong competition, financial constraints, decreasing inventories and customer insolvency, just to name a few), there are still concerns related to Taranto-based steel producer Ilva. Federacciai, the association of Italian steel industry enterprises, considers the appointment of an administrator by the government for the company to be risky for Italian industry. However, Flavio Zanonato, Italy's economic development minister, has pointed out that the closure of Ilva's Taranto plant would have had a negative economic impact of €8 billion per year, €6 billion of which would be caused by increased imports. In Italy, flat steel imports from non-EU countries have already more than doubled year on year in the first quarter of 2013. The side effects of closure would hit all auxiliary industries and in particular the mechanical industry.
Operators consulted by SteelOrbis hope that the market will achieve equilibrium as soon as possible, in particular through a reduction in supply, but for the moment they cannot exclude the possibility of further price declines.
€1 =$1.32