Italian merchant bar buyers have been left puzzled by the concentration of the country’s production in the hands of local producer Beltrame.
Beltrame has made a commercial deal with Ferrosider, owned by specialty steelmaker Ori Martin, to sell its production (see Kallanish 2 October). The deal makes Beltrame the largest producer in Italy, boasting the country’s largest product range and becoming the only producer to be able to produce certain grades.
The deal with Ferrosider has weakened domestic competition, and large distributors will have a very limited choice of suppliers, Kallanish is told by buyers. This month the contract and asking price of merchant bar has suddenly gone up from Beltrame by as much as €50/tonne ($59) compared to last month, leaving service centres with no other choice than to pay the increases despite weak activity for merchant bar downstream.
One large distributor has seen its merchant bar sales erode significantly starting in 2019 and even more so this year. “Merchant bar is our worst performing product because consumption is collapsing in Europe,” he says, adding that his customers cannot afford to pay increases and merchant bar sales will continue to suffer.
The only other two producers left in Italy, Acciaierie Venete and Olifer, are also expected to increase their prices in line with Beltrame. However, they are not able to compete with its new output and enlarged product range. Cheaper Spanish-origin product is currently not active in Italy, but large buyers have vowed to look for material abroad in an effort not to depend on one producer only.
Merchant bar contract prices in Italy last week were between €70-90/t base ex-works. Sources believe that as of this week contracts will increase to €90-100/t base ex-works. Including €420/t ($492) size extras, prices are currently at €490-510/t ex-works.
Last week Beltrame announced it has made a deal to buy the commercial business unit of Ferrosider together with all its stock. This will ensure production continuity at the Ferrosider plant in Brescia.