Traders in Italy are not very happy with the maneuver which producers in the country have affected with a view to bringing the prices of stainless welded tube into line with the rising raw material costs. The current situation is influenced by various factors, though the overall picture is one of a lack of support for the process put into motion by the producers.
One trader commented, ”At the present time, I don’t think that any economic principles exist which provide support for the increases sought by the producers.” National consumption is currently too weak for this pill to be swallowed without pain. This view was also supported by another trader who said that it was necessary to make a fundamental distinction between apparent and real consumption. He elaborated, “The situation is different now because, while real consumption has remained substantially unchanged, apparent consumption has seen decisive backward steps since the consumption boom of 2006.” In other words, the selling off of stocks which started from the end of last year caused a readjustment of sales prices, which put the producers on a state of alert.
Traders also added that in the present market context, apart from the issue of rising industrial costs, a significant effort would be required in order to transfer such increases downstream to end-users.
There is also a second factor, inherent in the Italian product distribution system, which impacts seriously on the market. As one trader explained, “In Italy, there are big traders who no longer function as stockists. These traders purchase huge quantities just a few times every year, in contrast to the small-to-medium traders who take in new supplies with far greater frequency.” These latter ones are obliged to accept the increases which are decided upstream and then pass them on to the end-users. The big traders, however, are better able to absorb the impact of price variations by spreading their pricing policy out over a greater time period. As another trader who was interviewed stated, “The price hikes sought by the producers are justified by those companies’ own economic situation. However, they have excessive force in seeking these increases.” Another interviewee added, “It would have been more appropriate to implement gradual increases spread over the course of a month, thus also giving the time to the smaller firms to pass on small increases at a time to the end-users.”
Imports constitute an additional decisive factor. The volumes arriving at the ports, especially from the Far East, are showing a marked rising trend. “This is a phenomenon which should give pause for reflexion to European as well as Italian producers,” one market player stated. Another added, “The price gap between domestic and imported products has reached such a level as to allow some dealers to sell Asian stainless steel tubes in the market at a price lower than that sought by EU producers, while at the same time earning a good profit margin.