Ferroalloys shortage, costly HBI hit Italian steelmakers: Assofermet

Italian hot-briquetted iron demand is decreasing due to the skyrocketing prices registered since the beginning of the war in Ukraine. High HBI values have made the raw material uncompetitive compared to scrap, says Italian trade association Assofermet in its monthly report monitored by Kallanish.

Steelmakers’ ferroalloys procurement has also been impacted by the conflict. As mills are looking for alternative sources of supply, modifying the entire procurement flow is proving to be a sluggish process. If the war continues, Italian producers will be forced to buy from Far Eastern countries such as Malaysia and India, resulting in longer lead times.

Deliveries coming from Russia are slow and limited in tonnage due to the latest EU sanctions. Prices for some ferroalloy grades have increased by as much as 40% compared to pre-war levels. The ferroalloys market in Europe remains in a phase of stagnation April, with prices high.

Meanwhile, in the scrap sector, Italian mills kept domestic buying values low in March but paid elevated prices for imported material from France and Germany. The further scrap price increases being registered in the rest of Europe risk pushing prices up to record highs this month. However, both finished products and scrap have reached levels that are unsustainable for the current uncertain economy, which is strongly impacted by inflation and the consequences of the war in Ukraine, the report continues.

“Raw materials at an all-time high, expensive energy, procurement difficulties, the war at the gates of Europe and related financial difficulties connected to skyrocketing prices: if these are the fundamentals of the current economy, the real question is not if, but when the wind will change and how much damage it will do,” Assofermet warns.

Natalia Capra France