Italian longs consumption continues to drag

The Italian longs market continues to drag on the backdrop of slow consumption and a negative outlook, Kallanish understands. Producers implemented a €20/tonne ($21) increase last month but did not manage to increase transactions which remain mostly flat compared with May.

Sellers and buyers in the distribution sector report low sales and back-to-back purchases for merchant bar.

“I have been quite happy until April as I sell several longs and the average for January-April was OK,” an agent comments. “Demand in May across all products was extremely low and I do not see much improvement in June. The month started also very slow.”

Merchant bar prices are flat at €280-290/t base ex-works while Spanish offers are at €260/t delivered. Including size extras, domestic material remains at €700-710/t ex-works. Some producers are beginning to adapt to the new market conditions where clients buy small tonnages every week but require swift delivery. Clients are being offered truckloads of mixed material at competitive prices.

In this market steelmakers offering relatively long lead-times tend to lose orders and volumes. Clients ask to be delivered within a few days and refuse to commit to larger volumes.

“Buyers are scared by the demand weakness of May and expect June and July not to be much better,” another seller comments.

Section prices also struggle to increase. The first category of beams is at about €760-770/t delivered on average, flat on-month, with cheaper European material available. A purchasing group warns of the low margins throughout the value chain and low selling prices downstream as the slow sales volumes are forcing some companies to chase volume discounting material.

ArcelorMittal is announcing higher prices for long products across Europe. The move is driven by the high cost of production and the need to recover margins. The steelmaker is reported to be offering €30/t above its May quotes for all commodity grade longs.

Natalia Capra France

kallanish.com