Rapid rise in local Italian scrap market expected to be short-lived

The local Italian scrap market has recorded a sudden spike in prices in the range of €50-70/mt over the past two weeks but not for all buyers. “There is some interest in scrap, mainly from rebar producers who received some orders,” an Italian source commented. However, the general situation remains unclear with the fundamental conditions unchanged. “The future sentiment is not so good. This increase will most probably be temporary. We shall wait and see. Ahead of the summer holidays, Italian producers are planning maintenance works and so they will not require scrap in the coming period. “What happened is that producers have received sudden orders and did not have scrap inventories in hand. So, they returned to the market immediately but made a disaster of the price,” a source commented. Since it is the holiday season, scrap flow has already slowed down in the EU region, which has also made it hard on the mills that were trying to find material. On the other hand, the mills left out of this recent trading have reduced their prices to reduce scrap flow to their yards, SteelOrbis understands. Hence, the price range has widened.

Rising energy prices in the EU are also taking their toll on Italian mills’ future plans. Additionally, the European Central Bank is widely expected to increase interest rates for the first time in over a decade. This move may impact Italy hard since it is one of the two most heavily-indebted countries in the EU along with Greece. Under the current conditions, the expectations for the future trend of domestic scrap quotations in Italy remain pessimistic.

Currently, average spot prices in the local Italian scrap market are as shown in the table:

Prices include delivery and exclude VAT.