Local Italian scrap prices still unchanged, but expected rises seem confirmed

As anticipated in last week's report, rumors of possible price increases in the local scrap market in Italy have intensified in recent days. Although spot prices have not changed week on week and negotiations for monthly contracts are still ongoing, it is widely believed that prices for all qualities will increase by €5/mt to €15/mt starting next week.

The key factors for market operators have not changed - scrap availability is still on the low side and producers struggle to raise the prices of finished steel. In addition, many are considering high energy costs as a given fact, and not a variable anymore. On top of this, the duties imposed by the United States will have to be approached with caution. “In my experience,” said a major Italian scrap trader, “every time such measures are announced, an alternative agreement can always be found. Of course, on a psychological level the issue can be frightening, and companies [Italian producers and exporters of finished steel] will also have to try to reshape their business. They cannot suddenly decide to exit the US market.”

From traders’ point of view, there would still be room to ask for increases in scrap sales prices, given the scarcity of the material, but there is uncertainty about the extent of this request. The scrap yards of many Italian steel mills are full, and they are in no hurry to buy. Consequently, they may even decide not to grant the requested increases to the full extent.

Scrap demand is still decent, according to most sellers in the local market, but steel producers are not operating at 100 percent capacity. In fact, the capacity utilization rate of many producers is between 50 percent and 65 percent. “I was expecting different price levels,” an Italian scrap trader told SteelOrbis, adding, “but during the first negotiations my expectations were not met. We are trying to sell as much as possible, regardless of how much increase [producers] will grant.”

Scrap flows are low, but this does not seem to be a big issue from the steel mills’ side. Some of the producers interviewed by SteelOrbis, in fact, say they have sufficient stocks, especially since the demand for finished products - although still decent in the local market and low in foreign markets - is not lively. A major Italian producer also stated that he is planning a stoppage of a couple of weeks around Easter (starting from April 20) for maintenance, and he hopes not to have any major need to buy scrap by then. During that period, in fact, they might encounter logistical issues. The widespread sentiment, however, is that several plants will choose to stop production for a period to calm the market.

Prices include delivery and exclude VAT.

In Spain, scrap purchase prices of steel mills in the local market have increased by around €10-20/mt depending on the mill, and demand for scrap appears to be on the rise.

Prices include delivery and exclude VAT.