Italian scrap market still cautious, April prices confirmed as stable to slightly higher

The Italian scrap market has recorded negligible movements this week, with stable to slightly higher scrap purchase prices observed.

According to scrap traders, scrap demand has improved compared to the pre-Easter period, and this is probably due to the fact that steel production has continued at full capacity even on the so-called "non-working days". Despite this, official scrap purchase agreements continue to be concluded at unchanged prices or slightly increased prices by around €5/mt depending on the mill and scrap category.

For their part, however, producers remain cautious overall, in the face of a very delicate and uncertain geopolitical situation.

After Iran's reopening of the Strait of Hormuz following the ceasefire agreement with the United States on the night of April 7-8, gas, oil and electricity prices fell significantly, providing a perspective of cost relief for steel mills.

However, following the Israeli attacks in Lebanon yesterday, April 8, Iran has again closed passage to tankers in the Strait, showing that the situation remains very unstable despite the ongoing ceasefire.

Before the war, around 130 ships were passing daily through the strait, but, according to the Hormuz Strait Monitor, “A two-week ceasefire [was] agreed between US and Iran on April 7-8. Iran stated it would allow safe passage via coordination with Iran's Armed Forces with 'technical limitations'. However, Iran claimed it closed the strait on April 8 in response to Israeli attacks on Lebanon. The current status remains contested with only 2-7 ships transiting daily.”

According to international media, around 800-1,000 ships are now waiting to pass on both sides of the Strait, while the first round of peace discussions will be held in Islamabad tomorrow, April 10. Among the proposed points of negotiations, a possible fee to be paid to Iran to pass through the Strait of Hormuz.

The situation in the Middle East needs to be monitored closely as it changes hourly and, even if the situation normalizes after the negotiations and the two-week ceasefire, the pressure on the scrap and steel markets will still take time to ease.

In light of this, the reference prices for scrap in Italy remain largely unchanged, as shown in the table below. In particular, E1 scrap prices have been reported at €285-300/mt delivered to mill on average, whereas E3 scrap prices have been reported at €300-315/mt delivered to mill on average.

Prices include delivery and exclude VAT.