A market still in a state of uncertainty, but which is beginning to give evidence of a few comforting signals - thus the current situation in the Italian flats market may be summarized. After the drop in quotations seen from mid-April and the stabilization of prices observed in June, the change of direction now being experienced in the market which may be ascribed to at least three factors:
First of all, apparent consumption is improving: in recent weeks, in fact, apparent demand which had been weak since the end of April has begun to register a more positive trend. Nevertheless, traders are still showing a certain caution as regards purchases, still tending to limit themselves to the minimum quantities necessary to keep business ticking over.
In second place, end-user consumption has also seen a turn for the better. After a month of May which was not exactly over-impressive, end-users have again showed up for purchases, though they are doing so with great caution.
Thirdly, the current situation has been influenced by the lessening of offers from non-European Union countries- a factor which has provided support for quotations in Europe. Currently, offers from Asia and China (due also to the Chinese export tariff) are no longer very attractive to Italian traders and so there has been a clear drop in orders being placed with non-EU steel mills. The current difficult situation at the Italian ports (where inventory levels are very high) is due to the quantities of material which were ordered in previous months but which have only arrived recently.
For the near future, operators in the Italian flats segment are expecting a tangible rise in quotations in September (upon conclusion of the August holiday period), when the current destocking phase will have been completed.
On an international level, the market is stable. The only possible upset in the short term could be caused if Corus backtracks on its sales prices for the UK market. The market has not digested the recent 5-12 percent increases announced for the third quarter by the Anglo-Dutch producer, causing a fall-off in the levels of orders being received. Any change of heart on the part of Corus could have a psychological impact on market operators.
Finally, 54 percent of Italian service centers dealing in flats have predicted increased or similar sales volumes in July compared to June, with 46 percent forecasting a reduction in volumes. Meanwhile, 79 percent of the service centers surveyed said that they expect purchase quotations to remain stable in July compared to June. 67 percent expect a similar stability to be seen in sales quotation levels in July.