A market still in difficulty, influenced by the fierce competition between traders and the slowdown in demand compared to previous months - this is the picture of the Italian beams market which emerged from a market discussion which included the participation of Gianfranca Bellicini (Ferriere Scabi), Giuseppe Bricchetti (Carminati Distribuzione), Emanuele Marostica and Marco Sbaraini (Gruppo Manni), Giuseppe Masserdotti (Stefana), Maurizio Pastorino (Metalgoi), and Francesco Strada (Strada Ing. Achille).
Current situation in the Italian beams market - A slow and steady erosion of sales quotations for beams is being observed in the market at the present time. After the boom seen in the first part of the current year, a slowdown has been caused by the combination of a number of factors. In the first place, the strong apparent demand in the first part of the year resulted in an increase in distributors' stocks, followed inevitably by a destocking phase and by a reduction in demand from stockists. In second place, the hot competition between traders and service centers, who are engaged in a battle to redefine the ’geography' of the market, has placed an increasing downward pressure on prices. The result is that traders are giving their own customers greater discounts than those which they themselves manage to obtain from the steel mills. Overall, the distribution system is characterized by a lack of confidence.
As regards predictions for the short term, seasonal factors (such as the necessity of adjusting inventory levels in line with commercial and fiscal needs, and also the slowdown in construction activity due to the approaching holiday period) should entail a continuation of the current trend up to the closure for the Christmas holidays.
Prospects for New Year: Opinions differ - There are varying opinions in Italy's beams market regarding previsions for early 2008. While producers are optimistic, distributors show greater caution.
The steelmakers, also boosted by macro-economic factors, foresee a positive Q1 2008. The return of warehouse inventory levels in the EU to normal levels in recent weeks, combined to the increase in real demand (with Germany and Eastern European countries leading the way) should guarantee an increase in terms of volumes. Added to this is the necessity of taking into account the increases in production costs - in ferroalloys, energy, transport and scrap. Indeed, scrap prices are expected to rise due to the increase in global steel production and due to the jump in iron ore prices (which is likely to cause integrated mills to use an increasing percentage of scrap in their furnaces). Given all these factors, steelmakers are expecting a recovery in quotation levels, with upward corrections to be seen both as regards base prices and size extras.
Distributors, however, are less optimistic. Given the fierce levels of competition and the fact that real demand is not by any means terrific, stockists and service centers are more cautious on the issue of quotations. In particular, they consider that an essential condition for an upturn in prices (which today are at levels which offer little profit to traders) is an easing off of the aggression seen between traders, something which is difficult to imagine at the moment.