Italian scrap market uneven, first signs of weakness emerge

A rather uneven scenario has emerged in the Italian scrap market this week, with different decisions on scrap purchase prices by different steel producers.

According to traders, mills are trying to lower their scrap purchase list prices by €5-10/mt, with few volumes handled in the local market. "It's a lackluster month," a source said, The declines have not yet materialized into significant sale volumes," he continued.

"In the wake of the drop in the international scrap market, it is possible that the same trend will also manifest in the Italian market by the end of the month, but for now it is too early to talk about a downward trend," another source on the traders’ side commented.

Steel mills, on their side, are reporting a low willingness to buy. An important Italian mill has stopped purchasing three out of four scrap categories for about three months, while others are buying according to their specific needs. As a result, some producers have chosen to keep scrap purchase prices unchanged, while others have chosen to decrease their list prices by €5-10/mt depending on the grade and producer.

This decision, however, could be risky at this time of year, as many mills are preparing to slow production rates ahead of summer shutdowns and it is possible that a drop now could result in a sharp increase in September.

On the import side, prices from Germany continue to be quite high for the Italian market, and the incidence of transport costs by truck and train, which will become heavier as the summer season approaches, still need to be taken into account.

During summer, in fact, the presence of trucks on highways is reduced due to traffic-related issues, while some maintenance works are expected to begin at a key railroad junction that will force wagons to find alternative routes, leading to an increase in transport costs by at least €10/mt.

In addition to this is the structural shortage of vehicles, drivers and wagons that are worsening the general transport situation between Italy and Germany.

Finally, it is worth mentioning that - according to local media reports in Italy - the furnace of a steel producer based near Bergamo has been placed under seizure for an indefinite period following an accident involving a 55-year-old worker. Sources have reported that scrap deliveries have been temporarily interrupted, but the company has not yet released any official communication.

Considering all this, local prices of scrap in Italy have undergone some slight correction and have been assessed as in the following table. SteelOrbis notes that, within the range of HMS (E1/E3), E1 scrap prices are at €295-310/mt delivered, whereas E3 is standing at €315-330/mt delivered. In the shredded category (E40), higher quality grades have been reported at almost €370/mt delivered, while prices of higher-quality busheling can be up to €360/mt delivered.

Prices include delivery and exclude VAT.