Ferrous Scrap: Italy

After a very stressing month of hard talks about the Euro and the EU countries’ troubles, it is now crunch time. The new governments in Greece, Spain, Belgium and Italy will help for a positive solution (maybe), but for sure, heavy sacrifices will be asked to all of us for overcoming the crisis of the old continent. To forecast is always difficult and today is even harder, but the first six months of 2012 could be expected to be the same of the first half of 2009. Below you can find a short comparison between the week 47 of 2011 (first column) and the week 11/16 the lowest of 2009 (second column) SteelOrbis indexes:
 

In Italy we are ending the year with an important increase of the steel production (about 11percent YOY), thanks to the very positive mill output of the first nine months of the year. The higher contribution has is from the blast furnaces production. During Q4, the output has been reduced, but the final 2011 figure will show a positive performance, about a 10 percent increase. November scrap prices have been reduced around €10, up to €20 for the high grades. The mill inventories are not well covered due to less deliveries from the domestic market and some Italian railway station congestion. Arrivals by vessel were the lowest of the year, that is to say about 20,000 metric tons for scrap and about 35,000 metric tons for pig iron. The mills scheduled the end of year holiday stoppages on the average of three weeks, but they will maintain the scrap reception, trying to recover the low inventories before the January production resume and to be ready for the winter difficulties. Following are the November official average prices reported (€/per metric ton delivered):

Considering the Mills low scrap inventories and their pressure on the market to secure volumes, it is easy to say that the prices will move up but just for a short period of time.

PIG IRON - H.B.I.
The lower arrivals are reducing the ports, resellers and mills inventories, despite the weak consumption. Pig iron is now quoted below $450 per metric ton CIF for January shipment and around €360 pmt delivered end-users. HBI is quoted around $400 per metric ton CIF from South America producers. The low level reached by the pig iron and HBI offers on the market roused the end-users interest in new purchases.

STEEL
Even if the scrap prices are now moving up, the steel consumption and prices remain conditioned by the slowdown of the economic growth.

Ruggero Alocci can be contacted at mail@alocci.com.