Weak sales of finished product impact scrap: Assofermet

The outlook for finished steel product sales remains negative, says Italian steel trade association Assofermet. “Without a recovery in steel production and an improvement in the finished product sales – a picture that would lead to an increase in scrap demand– it is difficult to imagine possible increases in prices in the short term,” the association says in its market note monitored by Kallanish.

March domestic scrap prices declined between €15-20/tonne ($16-21/t). Demand from local mills remained consistently low due to production stoppages, which generated a significant slowdown in scrap deliveries. Despite the reduced deliveries, mills’ scrap yard stocks remain medium-high, Assofermet observes.

On the collection side, merchants noted a drastic drop in scrap availability on the market owing to the slowdown of manufacturing activity. This has sparked concern and may cause shortages if scrap demand recovers.

Meanwhile, the positive sentiment in the April pig iron market is forecast to drive some more scrap demand in Italy.

In March the Italian and European markets were generally weak with mills not showing particular interest in pig iron procurement. Russian producers refused last month to decrease their offers to Italy and the difference between pig iron and scrap prices remains significant. Internationally, Assofermet registered good pig iron demand and price levels. Offers from Brazil and Ukraine have resurfaced in addition to Russian offers.

US pig iron imports increased last month, allowing Brazilian suppliers to maintain a price level about $40/t higher than the European market.

Natalia Capra France