This month’s significant fall in Italian scrap prices, in the range of €100-130/tonne ($101-131) compared to June, is causing a heavy slowdown in scrap collection. Most mills will idle production already in July to address the issue of overcapacity, Italian steel trade association Assofermet says in its monthly market note received by Kallanish.
While scrap stockpiles are increasing at collection hubs, the heavy price decline is causing disruption in the supply of demolition grades such as E3 and E1. Selling costs have become too low to allow merchants to buy, transport and process these scrap types. By June, Italian scrap prices had lost the gains they made from earlier in the year.
The production stoppages announced for July and in some cases already implemented will not allow for a price trend change this month. The local scrap scene is “negative and rather risky”, the note states, and adds that French and German prices are also seen declining.
June also brought a steep reduction in pig iron prices in Italy. For July, “the concerning news affecting pig iron sales is the prolonged stoppages announced and already implemented by many steelmakers that have practically cancelled any interest to buy pig iron and HBI,” Assofermet observes.
Ferroalloy prices also continue to decline, in line with other raw materials, to levels sometimes below production costs. With production stoppages set to last 6-7 weeks, the association forecasts the Italian market to remain particularly quiet in the coming weeks. European pig iron, scrap and HBI demand is also seen particularly weak due to the downturn in finished products markets.
Natalia Capra France