Local Italian scrap prices down, negative outlook for the summer period

Despite the fact that most market participants did not expect downward corrections, deals closed this week indicated an average €5/mt drop in local scrap prices in Italy. According to sources, the decrease is closely linked to the performance of the finished steel market, which is continuously deteriorating; “there are no positive signs, there is a total absence of demand regardless of the strategies put in place,” said one source. In fact, some steel mills are already slowing down or stopping scrap deliveries and have reduced workers' shifts in anticipation of a further drop in production in July and long stops in August. A steel mill official commented, “our customers are stopping so we have to stop too. We cannot continue to produce at high costs without incoming orders and continue to stockpile material”. This situation implies a lack of support for scrap prices, aggravated by the arrival of ships from the US and South America.

Expectations are therefore negative and most market participants foresee further declines in the coming weeks. The outlook is no better in the long term and according to sources the market picture until September could be the same, especially for long producers, "Europe is in serious trouble, if something does not change at the macro level, in September we will find ourselves in the same situation we are in today”, a source told SteelOrbis.

Prices include delivery and exclude VAT.

In the local Spanish scrap market, prices remained stable this week as demand from steel mills continues to be rather sluggish. Since the supply of material is also rather limited, market participants do not expect any downward corrections for scrap prices in the coming weeks.

Prices include delivery and exclude VAT.