The Italian distribution sector has not yet felt the positive trend of surging demand and increasing prices for hot rolled coil. Demand for all coil derivatives remains subdued this week, with sales back-to-back and “seriously depressing prices”, according to service centres and distributors.
Some distributors’ stocks in Italy are said to be low and most companies are in need of buying for the first quarter of next year, which suggests the return in the coming days of some apparent demand. Coil derivatives such as sheet and tube are said to have now reached rock bottom. At current levels, they have become unsustainable and some price hikes are expected on both products possibly next week.
Asian HRC producers stopped quoting in Europe last week due to unsustainably low prices (see Kallanish 22 November newsletter). Imported HRC is expected to become uncompetitive and domestic producers will have to cover the majority of demand in Europe for Q1.
Prices of coil and derivatives in Europe will be supported in the first month of 2023 by lower coil availability due to the current production cuts throughout Europe and uncompetitive import offers. However, distributors argue that significant future price increases may not be absorbed by the weaker European economy and the market risks slowing to a halt again in Q1.
This week may be the last quiet period for sales in Italy before year-end and producers will have the upper hand in negotiations.
Natalia Capra France