Italian coil market undersupplied but demand remains weak

Italian hot rolled coil delivery times are lengthening due to production disruptions in Europe. ArcelorMittal communicated to customers last week that delays are expected to deliveries across Europe due to recent fires that impacted one blast furnace in northern Spain and another in northern France (see Kallanish passim). Some customers in Italy say they are seeing their coil deliveries delayed by as much as two months to July and August.

Italy, like the rest of Europe, remains in a situation of undersupply. Following the fires at ArcelorMittal and Tata’s force majeure at Ijmuiden, last week several northwest European coil mills left the market and are no longer taking orders. Despite Thyssenkrupp Steel refraining from confirming its market withdrawal, buyers say the steelmaker remains out of the market. This adds to Acciaierie d’Italia’s continued low output and lack of reliability.

“The ArcelorMittal France site in Dunkirk is adapting the operation of its facilities with a single blast furnace, with the objective of limiting the impact on customers as much as possible by relying on the group’s other European sites,” an ArcelorMittal spokesperson tells Kallanish.

ArcelorMittal in Fos-sur-Mer is said to be covering for some of the Dunkirk and Spanish production losses and allocations from mills in Europe is very limited. The gap between European material and import offers is now widening but Italian service centres have little appetite for buying at the moment due to high prices. Hot rolled coils from India, Japan and Korea are currently offered between €750-780/tonne cfr ($826-859) for July delivery. Some Asian producers are rumoured to be offering at €720/cfr for June loading. These prices are for low quantities up to 10,000 tonnes. For higher tonnages values are heard some €40/t lower. Italian contracts for HRC are flat compared to last week at €850-870/t base ex-works, or €900/t delivered. The market in Italy appears two-tier. Demand for hot rolled coils in Italy is very weak but so is supply. Lead-times are extending to July and August but one steelmaker is quoting June. Some sources do not believe the current coil shortage will cause buyers to “rush to purchase” and compete for material because the current economy and the lower consumption downstream do not support high coils prices.

Italian coils derivative prices continue to lag behind coil price increases. Service centres are reporting mostly stable values for sheets compared to the beginning of the month, but particularly slow sales. Many sellers are seeing a significant reduction in consumption compared to last year and report a slow April because of holidays in Italy. Coil service centres are currently not managing to properly pass coil price increases downstream. This is happening despite shortages of some grades.

Natalia Capra France