Italian steel mills restarting operations in October on new energy decree

Many Italian steelmakers are restarting production due to a small gradual recovery in apparent demand and a decree, called “Aiuti ter,” issued to help energy-intensive companies such as steelmakers and large re-rollers.

A number of Italian electric arc furnace-based steelmakers stopped production in August due to high energy costs and low demand, although most resumed intermittent production in September.

Meanwhile, only one blast furnace-based steelmaker, Acciaierie d’Italia, was running at a low capacity with two blast furnaces, BF1 and BF4, producing after it idled its BF2 in July.

Sources said the company was producing 10,000 mt/day of pig iron from the two blast furnaces, compared to the previous 15,000 mt/day.

It is easier for EAF-based steelmakers to temporarily shut in production, as they can be switched off easily, while blast furnaces require time and manpower to shut down, restart and operate.

The Aiuti ter decree provides a tax credit for companies to purchase of electricity and natural gas. The tax credits rose from 25% to 40% for energy- and gas-intensive companies and will cover costs for October and November.

The decree was one of the last acts of the Draghi government, with Giorgia Meloni of the rightwing party Fratelli d’Italia, Brothers of Italy, elected from Sept. 26.

According to the political party’s manifesto, Meloni will establish a crisis unit on energy and it will try help push for recovery in the infrastructure and automotive industries.

The manifesto is not that detailed and business industry sources, including steelmakers, told S&P Global Commodity Insights that they were assessing the new government, and in particular who from the coalition would be given key roles.

Meloni leads the largest party in a center-right alliance with Silvio Berlusconi’s Forza Italia and La Lega, the League party.

Having the majority, she will be able to decide without much pressure from allies, who to put in the Economic and Development Ministry and there are expectations that she will put in a technical minister with a similar agenda to the Draghi government.

Meloni has also spoken out strongly in support of the Western line about Ukraine and has said Italy will stay in Europe.

“Let’s put in this way, when industrial people met few weeks ago at the Ambrosetti Forum, at the annual international economic conference held in Cernobbio that brings together heads of state, ministers and business people to discuss current challenges to the world’s economies, when she spoke no one was terrorized by her views – in fact you can see there was not a bad reactions in the market,” a steel company source who attended the forum told S&P Global.

Platts assessed HRC in southern Europe at Eur750/mt ex-works Italy Sept. 26, down Eur650/mt from the intra-year peak reached on March 24, S&P Global data showed.

— Annalisa Villa