Italy

A very slow restart had been expected following the summer period, in line with what had happened in July when all operators slowed their sales in anticipation of probable price rises. Convinced scrap price increases were likely, service centres began stockpiling material and behaving like speculators.

As predicted in the previous Mirror, there has been: an end to the drop in coil prices; increasing imports of scrap from non-EU countries; the potential for a production recovery in in the final four months of the year; and a slight increase in scrap prices owing to shortages.

In the fourth quarter, indeed, major steel mills have applied significant increases to coil prices, thereby creating an expectation in the market that scrap prices will rise. However, the coil/scrap price balance still appears too weighted towards scrap.

The scrap price differential between the USA and Europe is enabling the latter’s steel mills to continue to import scrap at prices slightly higher than what is available on the European market but allows them to avoid becoming hostages to the demands of Europe’s operators.

Industrial production is not showing a large increase but is basically tied to a restocking phase.

The upward trend in scrap prices is largely driven by the speculative attitude of operators, as well as by the scarcity of scrap owing to low production levels. So the final quarter should see the following: steel mills with full order books; finished product prices on the rise; scrap shortages resulting in higher prices; and a continuing flow of scrap from the USA to Europe.