Italian merchant bar producer Beltrame is stopping its merchant bar production in Europe. The steelmaker is idling lines in Italy and France due to unsustainable cost of production, a source at the company tells Kallanish. The merchant bar production line in Switzerland, where the company produces mostly rebar, will also be idled.
Expensive energy, particularly in Italy, and high scrap and raw material prices, coupled with lower European consumption are beginning to erode margins. The company will raise quotes for merchant bar from stock by €20/tonne ($21.8) in Europe starting from 10 July.
In both Italy and France, long steel market activity continues to stagnate, with buyers only purchasing back-to-back despite low stocks, and pushing for prices to decline. If need be, Beltrame will continue to implement production stoppages for merchant bar in Europe throughout the summer to address the issue of overcapacity.
According to market sources in Italy, values are now at €360-380/t ($404-414) base delivered, depending on tonnage. Including size extras, domestic values are hovering at €770-800/t delivered, sources say.
The Italian government may cancel the tax credit for energy-intensive sectors such as steel and scrap, as well as the exemption from electricity transport and distribution charges. This move risks increasing electricity costs in the country by 35% for steelmakers, Federacciai president Antonio Gozzi warned last week.
The French industry pays about €42 per megawatt-hour electricity, while German steelmakers pay approximately €60/MW-h. Including the tax credit and exemption from electricity distribution charges, Italian steelmakers pay about €100/MW-h. Without the government’s help, energy-intensive industries will pay some €120/MW-h.
Natalia Capra France