Scrap prices decrease in Italy as pessimism grows

Compared to a week ago, pessimism seems to have increased in the scrap market both in Italy and internationally. Prices of scrap coming from European countries outside of Italy have already fallen by €15-20/mt this month. Meanwhile, starting from Wednesday, July 15, trains will not transport any scrap due to summer restrictions on rail freight in Europe. 

 

Looking at the wider context, the reduction in scrap demand from Turkish producers - both due to Ramadan and their large purchases of Chinese billets in the recent period - is a negative factor along with the slowdown of sales in the finished steel markets, the oversupply of finished steel, and the downtrend of iron ore prices, which seems likely to continue due to the tight margins of Chinese steelmakers and due to the decrease in iron ore production costs in Australia and Brazil, the main iron ore suppliers.

 

Meanwhile, in the Italian domestic market scrap prices have been decreasing by €5/mt every week of this month. According to local market sources, they have already decreased by €15/mt so far in July and are going to close the month indicating a total decrease of €20/mt. There is a lot of uncertainty among Italian steel mills, due to the negative trend of steel prices not only in the local market but at an international level. Imports of Chinese steel continue to have a negative impact as well, in particular imports of billets, even in Italy. 

 

Despite the slack market, there have been scrap purchases by those Italian steel producers which have the opportunity to buy with the aim of restarting their production in September. SteelOrbis has learned that an Italian steel producer bought a couple of cargos of scrap from northern Europe which are due to arrive next month, while another steel producer is expecting a scrap cargo to arrive in early August.

 

In general, Italian steel producers will suspend their production activities for a long period, i.e., for three to six weeks, starting in some cases from the end of July.  

 

Scrap prices in the local Italian market are now at the following levels:

 

Prices include delivery and exclude VAT.

 

€1 = $1.10