March is expected to be a weak month for scrap purchasing in Italy. However, the new war scenario in the Middle East, continued weakness in finished steel sales and limited availability of quality scrap are preventing any clear forecast for March, according to a recent note by Italian trade association Assofermet.
The association notes that it will be necessary to closely monitor developments in finished product sales and, above all, production levels amid the prospect of rising energy costs linked to the new US-Iran conflict, for which repercussions remain highly uncertain.
In February, the market started off strong before stabilising later in the month. The first part of the month saw average price increases of around €15/tonne ($17.60/t), confirming the upward trend already observed in January. This pushed domestic scrap sales to high levels, allowing steel mills to cover their raw material requirements.
“Towards the end of the month, limited production schedules, the stagnation of the Turkish market and the further deterioration of the situation in the Middle East partly cooled the market and triggered the risk of further price reductions, which for now have not materialised,” the note states.
In the pig iron segment, there is increasing concern about the lack of alternative supply sources to Russia and Ukraine, which also face very high CBAM costs. At the same time, Brazilian producers are seeking higher prices in the first days of March.
These increases reflect a rapidly evolving geopolitical situation that is inevitably pushing up both energy and insurance costs, Kallanish notes.
“The entry into force of the CBAM regulation, difficulties in understanding the cost calculation mechanism, which varies depending on the origin of the material, and the fact that most steelmakers are already well stocked have weighed on new negotiations. This comes despite some signs of buying interest, particularly for Brazilian pig iron, for which CBAM cost is expected to be lower than that of other sources,” Assofermet concludes.
