Local Italian scrap prices stabilize, further increases likely for March

After rising by €20-30/mt since January, local scrap prices in Italy have remained largely unchanged over the past week, registering only a €5/mt increase on the upper end for turnings and HMS.  Some have defined the situation as “unhealthy” where traders need to raise scrap prices due to a lack of material and producers are forced to accept them in order to continue production.

“The increases have consolidated and stabilized, but there is still tension in the market,” reported one scrap dealer. In fact, market participants paint a picture in which demand, albeit low, exceeds the supply of raw material. “Although not at full capacity, we [steel mills] are all working and scrap is being consumed,” an official at one steel mill commented. Indeed, even according to Federacciai's latest survey, Italian long steel production improved slightly in January, by 2.6 percent year on year.

As far as March is concerned, market participants agree that scrap prices will likely continue to rise gradually. “In the coming weeks, prices will hardly go down, but there will not be any big increases either. There will be upward adjustments according to the needs of producers and traders, perhaps by €5-10/mt,” said one market expert. Producers also agree. One stated, “We will have to add a few euros to stay in line with the market. Supply is scarce, so we have to adjust to scrap dealers’ prices to bring in raw material.” However, producers report that these increases are difficult, if not impossible, to sustain. “We will try to pass them [the scrap increases] on to the finished product, but the processing costs are also very high right now,” he added. Another steel mill manager noted, “Scrap is also going up in the wake of the increase in export prices to Turkey and in the US due to cold weather and logistic difficulties,” adding that it is possible that producers will make production halts around Easter to try to maintain their margins.

Prices include delivery and exclude VAT.