Short E8 scrap supply pressures Italian rod further

Tight supply of mixed and high-grade new arisings E8 in Italy is causing prices to rapidly increase and disrupting drawing-quality wire rod production.

A similar if not worse situation is being reported in France and Germany, where wire rod producers are looking for E8 to be able to respond to increasing European demand. Short supply of E8 is also pushing prices up throughout Europe, scrap and wire rod sources tell Kallanish.

In Italy, all rod producers stopped sales last week due to escalating prices. They are now struggling to find the high-quality of E8, particularly, and will not go back to quoting unless they resolve the issue of price and supply

The high grade of E8 was sold last week in Italy at €420/tonne ($509) delivered. This price, however, has become outdated as mills are now paying €440/t delivered and €450/t is being quoted.

Italian mills purchase this grade from Eastern European countries, France and Germany. This month, however, these regions will be shipping considerably lower volumes to Italy due to the short supply. Compared to northern Europe, southern Europe has some more E8 availability due to the presence of large re-rollers. This is however not enough to respond to booming demand from mills.

Before Italian wire rod producers stopped sales, local drawing-quality material was sold at €700-720/t ex-works, up from €680-700/t previously, with drawing mills requesting material thanks to their high level of orders. When producers go back to quoting, the product is expected to approach the level of €800/t ex-works, as current scrap prices make even €750/t unworkable, a source believes.

The escalating tension with E8 in Europe is not seen easing in the short term. French drawing-quality material is also at €700/t base ex-works. Domestic transaction prices in other northern European countries for drawing-quality wire rod are currently at €670-690/t ex-works but producers are also asking for €700/t ex-works on average (see Kallanish 7 May).

Natalia Capra France