Summer weakness continues in Italian scrap market

The Italian scrap market has remained mostly quiet this week, and the scenario is expected to remain unchanged in the coming weeks amid the typical weakness that characterizes the summer season.

The silence in the finished steel segment, characterized by difficult sales and a slowdown in production, has caused scrap prices to gradually weaken and trading activity to decrease in terms of both volumes and the number of deals.

"There are few developments and a lot of sluggishness,” a source said. Another supply-side source interviewed by SteelOrbis said that demand was lower than last month and that he was "quite surprised by how quickly this change occurred, considering that the first part of the year was characterized by very strong scrap demand."

At the same time, the source commented, "The availability of collected material is lower than in past years, with an estimated reduction of between 10 percent and 15 percent, mainly due to lower industrial activity," but he admitted that, at the moment, mills' requests are lower than the availability of scrap. He also said he believes that the bottom level has already been reached and that he expects July to be quiet and stable in terms of prices.

"Mills heavily rely on internal scrap generation, which is also why demand is falling," another trader commented, adding that he believes the price declines will continue until the end of the month.

For their part, mills have significantly reduced their scrap purchases due to the aforementioned summer shutdowns, and they expect further price decreases. "It is possible that HMS scrap will fall to €260-270/mt [delivered to mill] towards the end of July," an Italian producer said.

In light of the above, scrap prices in Italy have decreased slightly compared to last week's levels, standing as shown in the table below. It should be noted that, within the HMS scrap grade, E1 stands at €275-290/mt, while E3 stands at €295-320/mt.

Prices include delivery and exclude VAT.