Italian long steel producers consider stoppages amid energy crisis

Italian long steel producers may not resume operations after their summer stoppages if buyers refuse to accept the higher steel prices, several market sources told Fastmarkets this week.
Spikes in energy prices in Italy have led to substantial increases in production costs for local steelmakers, and so many are targeting considerable post-summer price rises. If buying activity remains weak and buyers reject the higher levels on offer, then Italian producers will have no alternative but to halt production, Fastmarkets heard.

Electricity prices in the nation averaged around €400 ($399) per MWh in July, up from about €271 per MWh in the preceding month and up sharply from €103 per MWh in July 2021, according to local energy service company Gestore dei Mercati Energetici.

During the week ended Friday, however, average electricity prices in Italy surpassed €700 per MWh.

Earlier this week, ArcelorMittal announced it had increased its long steel price in Europe by €100 per tonne amid the energy price spikes.

On Friday, the mill had also pushed for higher flat steel prices in Europe.

Long steel producers in Italy were mulling a similar move, stating that €100 per tonne is “the bare minimum increase to account for higher costs”.

However, fundamentals in the nation’s long steel market were not strong enough to support such an increase, Fastmarkets heard.

“For September, the price for wire rod in Italy should be around €900-950 per tonne exw, however currently buyers are placing bids at €800-950 per tonne exw,” a mill source in Italy told Fastmarkets.

“In case buyers refuse to accept the [long steel price] rise, practically all Italian long steel mills will be forced to stop operations, or they simply won’t restart after summer,” a second mill source said.

Fastmarkets’ price assessment for steel wire rod (mesh quality), domestic, delivered Southern Europe, was €840-900 per tonne on Wednesday, unchanged from a week earlier.

Published by: Julia Bolotova