With the closure for the summer holidays rapidly approaching, the Italian scrap market situation is characterized by a substantial balance between supplies and offers, though both are at low levels. Many players perceive a certain increase in shortages of scrap supplies, given the low output volumes in the local market resulting from the mills' production cuts in previous months. Also, this situation of supply shortage has been influenced by a general standstill in trading activities. In addition to the low level of demand, some traders' inventories are still partially filled with scrap purchased at high prices, and so in order to protect their profit margins traders are unwilling to accept orders. If traders did accept any orders at the current time, they would be forced to sell materials at below cost level.
On the consumption side, mills are refraining from making any long-term purchases: the only orders concluded have been aimed at satisfying mills' immediate scrap needs. With producers avoiding purchases for September and still maintaining a wait-and-see stance, most purchasing activities will be halted due to the summer break and will not be resumed before October, given the mills' long summer stoppage as regards production activities. However, some mills may still be working in August, trying to take advantage of the summer discounts in power supply charges.
According to many players, the latest uptrend in scrap prices has been due more to the increase in finished product prices rather than to any actual revival of demand.
SteelOrbis has learnt that the current ex-works prices in the local Italian market for demolition scrap stand at €155-165/mt, while shredded prices stand at €170-175/mt with busheling at €170-180/mt.
Many traders are concerned by very considerable lengthening of payment periods by the mills: the average delay before payment is now 90-105 days, though there is a tendency is to postpone payments by a further 15 days, with the total delay in many cases reaching 120 days.