Price escalation disrupts Italian distribution activity

Italian distributors are facing price chaos as long products and pipe values are increasing every day. The current situation is considered unsustainable, particularly by smaller companies that have stopped purchasing at current prices.

All Italian longs mills are this week either stopping their hot-end areas and re-rolling using billet stock or reducing shifts to avoid producing during peak electricity hours. Despite the current instability, distributors say they are working well with a high level of demand and high margins.

The challenge however is understanding which price to apply when producers continue to increase quotes. On Thursday, some longs makers increased their values again by a further €50/tonne ($55) after already implementing hikes in the previous days, sources tell Kallanish. They are grappling with raw materials shortages, forced stoppages and expensive energy.

Prices for coil derivatives including welded tube and sheet are also skyrocketing. Distributors say that tube discounts are down to ten points on average. At the beginning of the week, the market was talking about 15 points, while last month in Italy the level of discount was some 25 points. Each point of discount for re-rollers who use this pricing system is equal to €16-17/t, sources say.

Re-rollers are busy updating their price lists often. Hot rolled coil prices have reached the level of €1,300/t base ex-works this week, but this is only a price indication valid until the end of this week. Kallanish understands that Marcegaglia – due to the HRC price escalation – is going to update its price list to allow distributors to sell using the re-rollers’ list and resume its June 2021 list.

Sheet prices have gained over €200/t in the past ten days, with values reaching €1,650/t for some galvanised grades.

Natalia Capra France