The declining trend of domestic hot rolled coil (HRC) prices has not stopped yet in the Italian market. At present, local base prices amount to €400-410/mt ex-works ($444-455/mt), against the average level of €410/mt recorded seven days ago.
Demand remains weak and service centers are keeping inventories at low levels, partly due to the approach of the end of the year. According to various sources, however, the fall in prices may not last long. "Global iron ore prices have decreased in recent weeks, but those of scrap have stabilized in the Italian market," one source commented. It remains to be seen, however, to what extent the decision of major domestic steelmaker Acciaierie Arvedi to reduce production at its Cremona plants in November and December this year will affect local scrap prices. Rumors had previously spoke of a postponement of Arvedi's maintenance works to the beginning of 2020.
On the import side, offers for Italy have recently been below €400/mt ($444/mt) CFR in general. However, Italian buyers' interest has remained limited both because domestic prices could fall further and because domestic producers are able to guarantee much shorter delivery times.
Looking at northern Europe, HRC prices fell in the past week from €425-435/mt to €420-430/mt ($466-477/mt), ex-works. The spread between Italian and northern European prices has shrunk from €50/mt in January this year to €20/mt currently.
Most sources polled by SteelOrbis believe that HRC prices in the European market will not show any recovery before the start of next year. In the first quarter of 2020, the situation could improve mainly thanks to an increase in apparent demand, which is extremely low at present.
€1 = $1.11