In the past week, local Italian scrap prices have remained weak. While premium grades of scrap slowly lost ground in the first part of October, now it seems to be the turn of hot melting scrap (HMS) quotations to lead the decline.
In the past week, local HMS prices in Italy decreased by €10/mt ($14/mt), dropping below €300/mt ($417/mt) for the first time in a year. The average price is now at €290-300/mt ($403-417/mt) for HMS. Meanwhile, shredded and busheling scrap prices paused their downward movement, staying respectively at €320-330/mt ($445-459/mt) and €340-350/mt ($473-487/mt) (prices are delivered to customer, excluding VAT).
According to market insiders, steelmakers' activity is on the low side, and their resumption of operations following the summer holidays has been only partial. Accordingly, in some cases they have reduced activity by one working day a week, and in other cases they are postponing several supplies they had already booked at the end of September. On the other hand, they have to face the slackening of the Italian consumer markets and their dependence on exports, which are highly influenced by the euro/dollar exchange rate. The third factor leading to the scrap price decrease is the approach of the end of the year, as many steel mills are already reducing purchased scrap volumes with the aim of avoiding excessive scrap stocks.
Basically, the local Italian scrap market is totally aligned with the current downtrend in the global raw materials market. In fact, while the euro/dollar exchange rate is still at favourable levels, exports do not always represent a good deal because the export markets are also deflating, sometimes much faster than the Italian market.
Last but not least, given the recent events on the Libyan front, SteelOrbis sources underline the importance of the North African country as a huge opportunity for the whole Italian industry, which could play a key role in the rebirth of Libya. Italian scrap traders hope the African country will have a moderate government, open to trans-Mediterranean trade, and state they are ready to face all likely competitors. Clearly, this is a mid-term scenario: probably nothing will happen in relation to Libya until next spring, but until then scrap traders will have to find the answers to the slowdown in the Italian and European economies and local financial troubles.