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Italy

The final quarter of 2021 is expected to be very positive for everyone. Stainless steel mills are enjoying their best period in recent decades, facilitated by the application of import duties on finished stainless steel products from non-European countries. Thanks to an economic recovery from the peak of COVID, there has been strong demand for stainless steel and a consequent supply deficit which has pushed prices higher. However, not all parts of the supply chain have benefited exponentially from increased profits. The industry using stainless steel products has not always managed to increase their final product prices, thus eroding their margins, and the same goes for scrap operators. In fact, the gap between the price of scrap and that of finished products has continued to widen. Indeed, the loudest complaints from service centre operators relate to the low value attributed to scrap compared to the ever-increasing price of coils.

This situation is very evident at the time of writing. In October, stainless steel mills further lowered the parameters for purchasing scrap. In fact, two of the main components of stainless steel - iron and nickel - have suffered price declines whereas chromium has registered a considerable increase. But the sum of these effects has actually been to decrease the selling price of scrap at stainless steel mills while maintaining, if not increasing, the sales price of the coils.

It is not clear how stainless steel mills are able to impose their policy - both on the sales side and on the purchasing side - during a period of industry euphoria. The availability of scrap is surprisingly high at present but could run out at any moment owing to two factors: first, the Indian market is increasingly rebuilding its purchases of scrap from Europe; and second, with the achievement of all annual budgets in advance, they could postpone the sale of their stocks until next year for fiscal reasons.

There is expected to be a continuous demand for scrap from stainless steel mills, certainly into the early quarters of next year. While no predictions are possible in terms of scrap prices, an increase for finished products before the end of this year is certainly plausible.