April witnessed an intriguing dynamic in the Italian and European steel industry, with mixed signals regarding volumes sold but with growing interest from buyers, as highlighted in the monthly market report by Assofermet Acciai, the association representing Italian distributors of scrap, raw materials, and steel products. Despite the slowdown in activities due to the holidays in Italy and central European countries, some end-users opted to prudently cover their sheet and strip needs for the coming months, driven by the rebound in coil purchase prices.
The first half of 2024 concluded on a negative note for carbon flat steel service centers in the Italian market, with a significant drop in demand that has been ongoing for several months. This is the key takeaway from the monthly report by Assofermet Acciai, the association representing Italian distributors of scrap, raw materials and steel products. Compared to the same period in 2023, sales volumes fell by 15 percent, leading to an unsustainable situation for the pre-processing and distribution sector, characterized by low margins.
Despite the current weakness, some end-producers are showing interest in negotiating supply batches for the fourth quarter of 2024 and the first quarter of 2025, hoping to benefit from the current low prices. However, the recent amendment to the safeguard measures approved by the European Commission, effective until June 2026, risks negatively impacting the flow of raw materials, especially for hot coils. This change imposes a limit of 15 percent of the total available volume for each country in the "other countries" quota.
"Our concern focuses both on the lack of raw material availability and the consequent difficulty in maintaining adequate stock levels to meet end-customer demand, as well as on the inevitable price increases that EU producers will apply, due to the reduced export capacity of steel mills in countries affected by this controversial measure," Assofermet Acciai declared.
The distribution of stainless flat products has faced difficult months to recover selling prices, which currently do not cover operating costs. Assofermet Acciai’s forecasts for July indicate a possible price increase, with European steel mills holding firm on their positions. Sales volumes remain volatile, characterized by weak apparent demand and limited orders from end-users. The end of the strike at Acerinox could bring additional steel to the market at a time of weak demand, further complicating the situation, Assofermet Acciai noted.
Regarding stocks of flat and long carbon and stainless steel products, June saw a cooling of enthusiasm compared to the previous month, with weakness in orders despite annual volumes remaining stable. Flats show stability in volumes, while beams recorded seasonal growth. Rolled products have slowed down, with carbon steel prices remaining stable and increases for stainless steel.
International uncertainty, influenced by the weakness of the German market and various external factors, makes the future uncertain. July is expected to be complex, with potential shortages of some products due to the prolonged closures of steel mills.
Immediate demand for tinplate remains persistent, while scheduled orders are on hold pending provisional duties on imports from China. Meanwhile, both non-European and European products have seen a small upward adjustment, indicating a possible more substantial increase on the horizon, Assofermet Acciai stated.