Economic uncertainty and slow orders are hitting Italian stainless steel service centres’ margins and volumes. Demand continues to be sluggish but processing costs are simultaneously increasing, local steel trade association Assofermet warned during a meeting this week.
The sector is experiencing the worst margin contraction in 2023, which has become worse over the past 90 days. “We continue to see, on the one hand, a reduction in demand and, on the other hand, requests for increases from steel mills. The picture in Italy is one of high – but normalising – inventory levels and rising operating costs, preventing full price recovery,” Assofermet stainless steel service centres division coordinator Alessandro Bettuzzi says in a note sent to Kallanish.
“From the perspective of steel mills, the first half of 2023 was generally positive, both in terms of production volumes and margins … As for steel users, they are currently operating in an even more precarious condition due to the hardships of planning and scheduling purchases. The great uncertainty in the current market, caused among other things by the inflationary effect, makes them extremely cautious about both stainless steel consumption and investment,” he adds.
The association has warned of the danger of green steel and decarbonisation creating two parallel markets, a high-end one made of products resulting from sustainability policies and a consumer market with more affordable prices. “There are no conditions to impose the green standard in a homogeneous and distributed way in all contexts,” observes founder of T-Commodity Gianclaudio Torlizzi.
The Italian stainless steel market for both longs and coils has seen a harsh slowdown this year. Steelmaker Acciai Speciali Terni, part of Arvedi, has implemented several production stoppages due to sales volume contraction (see separate story). Italian demand for stainless flat steel continues to be fragile downstream.
Despite some growth in coil sales in September and October, service centres and re-rollers have not managed to pass on price increases downstream. Stocks are medium-high. The market for service centres’ clients is slow and is not absorbing the price increases. Sheet values are at the same level as producers’ coil levels, meaning these prices are not sustainable (see Kallanish passim).
Natalia Capra France