Italian scrap prices stand still amid pre-holiday sluggishness

Scrap prices in the Italian domestic market have remained unchanged at the following levels in the past week:

Demand from Italian steel mills is very poor given the long production halts during the summer. Market operators consulted by SteelOrbis state that the market is practically inactive and has almost already gone on holiday. On the other hand, overall industrial activity in Italy is also very quiet, and this means fewer scrap volumes are available to traders. In this context, supply and demand are almost equally weak. Although scrap quotations are at their lowest levels of the last year and a half, steelmakers are not willing to buy scrap before the summer holidays because of the lackluster situation in the long products market. According to the most recent market outlook provided by EUROFER, steel consumption by the construction industry in the EU will not pick up before 2013 and Italy could be one of the last countries to see a revival in consumption levels.

Moreover, Ramadan has put the brakes on new finished product bookings from the Middle East and North Africa (MENA) region and has caused a slowdown in Turkish scrap demand. In this environment, it is unlikely that Italian scrap prices will show anything other than a sideways trend before September. Domestic scrap prices may show a recovery right after the return from the holidays, though the trend of finished steel prices will determine the stance of Italian steel producers.