Italy

General conditions have not changed; indeed, if possible, they have become even worse. Developments in Ukraine are taking on the proportions of a conflict that could directly involve the entire European continent.

The main cause of the crisis in the stainless steel sector is expensive energy. After the prolonged mill closures in the summer, the return from holidays did not bring a full-scale resumption of operations; production in September was in fits and starts, which did not allow the entire supply chain to restart. In fact, many steel mills have resorted to lay-offs to cope with the collapse in production.

All operators in the sector have finished products and still very expensive raw materials in stock, the sale of which is possible only if the seller is willing to take a loss. In addition, the European market is flooded with Asian products which were ordered before the outbreak of the crisis in July. All of this is generating not only a stalemate in new orders but also a disincentive for companies to plan new investments.

The drop in orders for the long product sector has not been as severe as for flat products, thus enabling producers to buy scrap at significantly higher prices.

The attempts to lower scrap prices in Europe, in contrast to what is happening in the rest of the world, have prompted many operators to export scrap to Asia.

The situation described above can be attributed to the following factors: the conflict in Ukraine; the energy crisis and subsequent increase in raw material prices; rising inflation and the consequent jump in interest rates; the breakthrough by Asian countries on blocks on finished product imports through the imposition of duties; and the consequent loss of competitiveness of European operators with the exception of long product producers.

While it is difficult to say which of these factors has had the greatest impact, it is clear that the beginning of the fourth quarter does not look any better than the quarter that has just ended. While many had expected a recovery in the final quarter of 2022, nobody is able to say with certainty that this will happen.

The collapse of the stainless steel market began in June and effectively halved the price of both scrap and finished products in just two months. However, this collapse has yet to provide the spur for a resumption of demand.