Local Italian scrap prices stable, but sharp declines foreseen

This short week between the end of the Easter break and the beginning of national holidays in Italy has reserved some surprises. While the Italian scrap market had last week seemed set to remain stable until mid-May, now the forecasts are for sharp drops in domestic scrap prices.

There are many factors contributing to the forecasts for such declines. The freefall in import scrap prices in Turkey (which stood at the reference level of $312-315/mt CFR for European origin on April 23), the euro-dollar exchange rate which is extremely unfavorable for exports, the absence of scrap demand from local producers, the downward trend in all European scrap markets, and finally the sudden increase in scrap availability in the Italian market.

"I wonder where all this scrap was when we were looking for it at the beginning of the year," a source commented, adding, "There is clearly something wrong." Until a few weeks ago, in fact, most traders in the Italian market were struggling to put enough volumes together to supply steel mills. Now that prices in the international market are falling, however, it seems that decent scrap quantities are available again.

“No one is selling and no one is buying at the moment, but I expect that, as soon as steel mills restart production in the second week of May, we will see a drop [in scrap purchase prices] of €30-50/mt," a local trader commented. "Forecasts are inauspicious," a source said. "But this is not the first time we see such declines in the scrap market. In spite of the downward movement, prices are still at good levels,” he concluded.

In short, most sources said they are concerned but aware that a sharp decline will necessarily be followed by an increase of scrap prices - probably not in the short term, but at least in the medium term.

All that said, and given the absence of steel mills from the market during this holiday period in Italy, scrap price levels in the local market have remained unchanged compared to last week. This stability, however, is only apparent. It is likely that scrap prices will fall by at least €30/mt once negotiations resume.

Prices include delivery and exclude VAT.

Prices in the local Spanish scrap market also fell compared to the previous levels. It is also worth mentioning that E8 scrap prices in the local Spanish scrap market stand at €345/mt delivered, VAT excluded.

Prices include delivery and exclude VAT.