Italian distribution reports negative second quarter

According to multiple Italian distribution sources, demand downstream for both long and flat steel is still weak. For many companies, the second quarter brought about a significant decrease in volumes. This has occurred during a seasonally robust period when the sector typically experiences higher profit margins and increased sales volumes.

May saw a disappointing performance in terms of sales and margins, but it was nothing compared to the disastrous month of June that followed. One distributor reports a 30% decline in Q2 turnover. According to another large distributor, volumes have decreased by more than half compared to last year. For certain products like welded tube and merchant bar, sources report selling only a quarter of their typical tonnage, Kallanish notes.

Market participants do not anticipate a resurgence in demand during July. In this challenging market, it seems crucial to maintain a healthy stock level and offer a variety of options to meet the diverse needs of customers in terms of grades and dimensions.

Some mills are also adjusting to this new way of working and are strategically selling primarily from their existing inventory, including a varied product range in their sales. Some distributors say they are striving to maintain their stock at levels consistent with the start of 2024. A third source says his firm may experience losses when it sells its product at low prices, but it can make a profit when restocking at lower prices.

Availability of both longs and flats is limited, but demand is in line with the limited supply. Drawing-quality wire rod is said to remain in the range of €620-630/tonne ($664-675) delivered, while rebar and merchant bar are at €600-630/t ex-works and about €700/t delivered respectively.

Natalia Capra France

kallanish.com