Multiple Italian distribution sources indicate demand for both long and flat steel in September did not recover adequately following the August pause. They report to Kallanish they are experiencing reduced customer activity and facing significantly low margins.
End users are executing weekly production halts and purchasing from the import market when prices are notably reduced compared to domestic values. A purchasing group notes the underwhelming performance of coil derivatives, including sheets and tubes. The increase in tube discounts in Italy has skyrocketed to approximately 47 points, resulting in a standard 40x40x3 tube being priced, unsustainably, at below €700/tonne ($776.4), while hot rolled sheet prices have fallen below €650/t ex-works.
Sheet and tube prices are experiencing weekly declines, consistent with the downward trend observed in coil prices across both domestic and international markets.
An important distributor indicates he is evaluating attractive offers from China for long products as well as from Turkey. The prevailing sentiment within the distribution sector indicates a strategy of buying low volumes, with the anticipation that longs prices will begin to decrease. Similar trends are emerging in other EU nations, including France and Germany, where purchasers expect a forthcoming decrease in prices (see Kallanish 27 September).
Currently, longs prices in Italy, similar to those in neighbouring countries, are predominantly stable, with rebar priced at €540-560/t ex-works and merchant bar at around €700/t delivered. Drawing quality wire rod pricing, which has been impacted by subdued demand, remains steady at €610-630/t ex-works, according to industry sources.
Distributors are seeing a portion of their inventory depreciate in value, specifically in the flats segment. “There is currently a growing apprehension regarding the financial outcomes of distribution companies,” the purchasing group source says and warns of challenges on the horizon.
Market participants do not foresee a rebound in demand before year-end, with scrap appearing to be the sole factor that could sustain elevated long prices. Mill sources are indicating fiscal difficulties and narrowed profit margins.
Natalia Capra France
