Italian flats end-users use layoffs amid low demand

There are expectations in the Italian flat steel market for potential increases in coil, tube and sheet prices, following the renewal of EU safeguard quotas from 1 July.

Until now, there has not been any notable increase in coil derivative prices, even though certain hot rolled coil producers and service centres have been raising quotes. Domestic levels for HRC are currently in the range of €620-630/tonne ($662-672), either ex-works or on a delivered basis, depending on the terms of the contract.

Over the past ten days, there has been an average increase of €25/t for welded tube, although sales volumes remain fairly modest. This indicates a tube discount decrease of approximately 1.5 points. Prices continue to be unsustainable, especially considering the additional costs that tube makers will now have to bear when clearing imported HRC through customs in July.

Based on certain sources, these unexpected imported HRC price hikes for tube makers will amount to approximately €60-80/t. Service centres are facing a similar predicament, with several companies expressing uncertainty about their ability to clear all their imported HRC through customs on 1 July. As a result, they may end up leaving some volume at the port, thereby incurring storage costs, Kallanish notes.

Demand for sheet continues to be weak. Service centres’ outlook for consumption in the third quarter is pessimistic. There is no sign of demand picking up, except for a minor technical rebound prior to the August shutdowns. Industries such as crane manufacturers and metalwork factories are going through temporary layoffs.

A buyer at an end-using company mentions his firm is currently working fewer days a week due to the slowdown in the construction sector. Contractors and subcontractors are experiencing a significant decline in sales. Orders from the white goods and automotive industries have also decreased notably compared to last year. Service centres are experiencing financial losses due to the combination of low consumption and low pricing.

According to sources, service centre values for hot re-rolled sheet range from €700-720/t ex-works, while pickled sheet is priced at around €750/t.

Natalia Capra France

kallanish.com