Italy’s domestic scrap market still following the same script

The situation in the local Italian scrap market is similar to that observed three or four months ago, before the Christmas holiday.

From the beginning of February, scrap prices in the Italian domestic market have decreased by about €15/mt, while in other European countries prices have decreased by €30-35/mt.

Within the Italian market, scrap availability is quite low, declining by 50 percent against the background of the slump in the automotive sector and in related scrap collection activity; however, demand is even lower than supply. At the current juncture, availability levels do not represent a major concern in market players' minds, as steel producers have cut their production levels considerably (by 50 percent on average). Scrap shortages are likely to be observed once production activity resumes at usual levels.

For now, the main concern of market players is to balance their accounts. The rare transactions which have been observed have been concluded at very different prices: with regard to shredded scrap, for example, prices stand at €190-205/mt delivered to customers; however, in the last week a transaction was concluded at €170/mt as some crisis-stricken suppliers are trying to sell all inventories built up in their stocks. It should be remarked that, from September up to the present, the US dollar declined by about 15 percent against the euro, causing significant harm to mills which export against payments in US dollars. Therefore, it is not likely that the situation will gain some relief within the current month, and, according to many market sources, it is also unlikely that March will bring a recovery. The main hopes are being placed in the stimulus packages recently approved by the governments of several countries; however, it will be necessary to wait at least six months to observe a real impact on the global economic situation.

Demand from end-users in the Italian steel market is also at low levels, but has not disappeared entirely. In general, sales activity has declined by 30-40 percent. Meanwhile, the production cuts carried out by the domestic steel mills have had a yearly equivalent impact of nine percent.

The prices in the local Italian scrap market are as follows:

All prices are for delivery to customer.