Local Italian scrap market stable, mills target lower purchase prices

Local scrap prices in Italy have remained unchanged this week, although some steel mills have tried to lower their purchase prices by about €5/mt due to low demand for finished steel products, especially longs. Uncertainty about medium-term price trends prevails in the market because of the many variables at play.

The local Italian scrap market has seen unchanged prices week on week. However, traders have encountered resistance from some steel mills - especially rebar producers, according to sources, - who would like to lower purchase prices. An official at one Italian steel mill said: "Mills are willing to lower prices. There is a lack of steel consumption and the demand is low. We are not selling." A situation that results in mills having almost full scrap yards and difficulties in unloading incoming scrap and could lead to production slowdowns.

On the other hand, according to traders, there are no conditions for a price drop because there is not much scrap available for collection and collection costs are high in Europe, unless "the international [scrap] market goes down significantly, then things could change,” as one trader said. As a matter of fact, signs in Europe are not encouraging, with Germany reducing imports of finished steel and slowing down production. In addition, according to one market participant, major Spanish mills are reported to have lowered scrap purchase prices by €15-20/mt, but it remains to be seen whether the new levels will be accepted by sellers. As one source said, "No one has clear ideas at the moment," and developments in the national and international finished steel markets will have to be awaited in order to gain a clearer picture.

On the export side, it appears that activity has slowed down as the current levels from Italy at $410/mt CFR Turkey or less are not very attractive to sellers. However, traders expect Turkish mills to resume buying at higher prices soon.

Prices include delivery and exclude VAT.