The Italian market for carbon steel flat products went through a quiet phase at the end of April. In the second half of that month, there were downward adjustments in the prices of some service centers for their regular customers.
The reasons for this limited decrease depend on macroeconomic factors, on seasonal trends, and also on psychological factors. In the first place, the fall in the value of the dollar had an immediate effect on some traders, causing further significant reductions in the prices of flats imports of non-EU origin. Apart from the influence of the dollar, the service centers also experienced a fall in demand at the end of April, due to the various holidays. This drop in demand, coming as it did after the excellent sales of the first quarter, has had a strong negative impact on the service centers, which have ceded some ground in their quotations.
However, according to the market players who were interviewed, the market downturn would seem to be only a temporary phenomenon: the principle economic factors, they say, are still oriented towards growth, while the sales prices of the steel mills are not giving any indication of a reduction, since the mills are already booked out up to the month of July.
In order to be able to make out the direction of the market, another few days will be necessary, during which the producers will reach full production capacity and will use up some of their accumulated inventory. Looking forward to the summer, the flats segment looks likely to remain in good health. The only question mark concerns the volumes of material arriving from the Far East. If very high, this influx could cause changes in the market's supply dynamics and in price levels.
Survey of Italian service centers
Italian service centers are inclined to optimism as regards the flats market situation for the month of May.
64 percent of service centers who were surveyed said that their sales volume was higher in April than in March. Meanwhile, 61 percent answered that sales volumes in April 2007 were better than in April 2006, while 29 percent said that there had been no significant year on year change. 50 percent of respondents stated that their inventories had declined in April, whereas 86 percent registered increases in both purchases and sales.
Looking forward to May, 64 percent of service centers expect an increase in sales volume. The decline in inventory levels is thought likely to continue in May, while quotations are expected to rise.