HRC market stagnation persists in Italy

The Italian hot rolled coils market remains in a lull this week, with weak demand from re-rollers and service centres. Producers, however, are not in a rush to sell. Italian steelmakers are heavily reducing or shutting down production due to unsustainable energy costs.

Acciaierie d’Italia, the joint venture between ArcelorMittal and state-owned Invitalia, is reducing utilisation at its Taranto steelworks. The steelmaker, formerly known as Ilva, mothballed blast furnace No.2 in August amid the downturn in prices and demand in the global coil market. At present, Taranto is working with two BFs. Italian steelmaker Arvedi is restarting production at its plant in Cremona this week after a week-long stoppage. Another halt should be implemented next week, but the firm refused to comment.

While energy costs are eroding margins, sales are only happening back-to-back and for small volumes. The pressure from competitive imported material from Asian countries is also contributing to the low domestic sales. Material from countries such as Japan, Korea, and Taiwan could be found at $660/tonne cfr at the beginning of September, but import quotes are now around $680-690/t cfr.

Producers from Asian countries are quoting December boarding and many local buyers prefer not to commit for such a long time with the deep uncertainty of the moment. Domestic HRC quotes are at €800/t ($810/t) base ex-works, but contracts hover at €750-780/t base ex-works, sources tell Kallanish.

Local buyers have been purchasing a mix of domestic material and imported. September is considered a month of transition as the industry awaits the EU decision on energy caps, put off until October. HRC asking prices are seen increasing by another €50/t in the coming weeks, but the almost total lack of demand is spreading fear.

Natalia Capra France