Italian wire rod producers are increasing prices by €20/tonne ($21) from June, Kallanish notes. As summer approaches, mills and their customers are preparing for August shutdowns, which are expected to be longer this year.
The increases could become more apparent in September contracts as buying activity has significantly decreased. Despite the continued low consumption, July sales have improved compared to the slow activity seen in June. This is attributed to a technical restocking before the August shutdown of the entire value chain. According to sources, the latest contracts did not include the €20 hike.
Imported material has no substantial cost advantage compared to domestic product. Domestic drawing-quality rod is currently at €620-630/t delivered. However, there is also material available from stock that can be delivered quickly, which is being marketed at €640/t delivered. Based on sources, the new prices for drawing-quality material are expected to be at around €650/t delivered.
Buyers are sceptical price hikes can succeed while consumption remains subdued. According to one source, there is no recovery expected in September due to reduced activity at drawing mills and worker layoffs at several customers. The latter have resulted in production being limited to five days a week.
Another source expresses concern about the declining competitiveness of the entire industry. Italy’s stagnating birth rate and reliance on low-skilled immigrants to work in factories mean mills and drawing mills are having difficulty filling positions.
“This is not a temporary crisis; we have entered a new phase of decreased consumption. Our competitiveness in Europe is declining. Wire rod derivatives from Asia, especially China, are available at highly competitive prices. The EU process of applying dumping regulations can be quite lengthy and bureaucratic. Brussels appears to be primarily focused on the industry’s shift towards sustainability, while European steel production has experienced a significant decline over the past 15 years,” the source asserts.
The construction sector is experiencing a crisis in a number of European countries. Buyers are purchasing around three cargoes per month to meet their immediate needs. Price increases will not be well received downstream, the source points out, adding that consumption downstream remains stable at lower levels. European mechanical engineering sector activity is currently stable, while the automotive and white goods sectors are in a slowdown.
A service centre that relies heavily on exports is reporting positive results and consistent demand from its export sales channels. However, local service centres, smaller drawing mills and metalworking companies in Italy are facing significant challenges.
Natalia Capra France
