The Italian downstream segment is being heavily impacted by the consequences of the conflict in Iran, with demand remaining particularly weak for Italian service centres, Kallanish learns.
In this context, a reversal of the current trend appears realistic only if negotiations aimed at resolving the conflict take place, according to a recent note by Italian steel trade association Assofermet.
“The sharp rise in fuel and energy costs is having a dual impact: on one hand, a contraction in downstream demand for finished products; on the other, an increase in logistics and production costs, particularly significant for energy-intensive sectors such as steel. This situation is unfolding against an already complex international backdrop, further complicated by the effects of US protectionist trade policies,” the note states.
CBAM, together with current and new safeguard measures expected to take effect from 1 July and anti-dumping duties, represents a strong deterrent to steel imports. The result is a shift in demand towards European suppliers which is supporting price increases even in an environment of weak demand and consumption, the association warns.
Service centres are reporting slim order books at the start of the second quarter, following a first quarter with overall volumes in sharp contraction.
Assofermet notes that steelmakers are seeing a firmly upward price trend while service centres are more cautious but determined to increase their prices despite the uncertain market environment.
Meanwhile, significant challenges persist around sourcing material from third countries. There is currently a real risk of being unable to guarantee customers the availability of specific grades typically procured from import markets. Supply concerns are persisting around cold rolled coil derivatives, with multiple service centre sources talking about a protracted shortage.
Imports of CRC from Asia have continued despite CBAM charges, but allocations are described as thin. One trader reports auction-style transactions taking place, with CRC quoted as high as €870/tonne cif ($1,002.88/t).
A service centre source that has continued to source imported CRC due to a lack of available European alternatives says it is preparing to inform customers that derivatives of specific cold rolled grades may not be available in the coming months.
Author: Natalia Capra
