Ferrous Scrap, Italy

The people living in Europe will remember this September for many reasons: the long summer, the high temperatures, the pleasant weather, the flat sea and the blue sky. But it will be remembered also for the fall of several commodities prices, gold less17%, barrel less 29%, copper less 30%, sugar less 33%, silver less 40%, cotton less 55% compared with the 2011 highest, the strengthening of the U.S. dollar against the euro and the worldwide financial worries. During September, the eurozone sovereign debt problem has become increasingly fierce and the unemployment rate in the U.S. keeps on. Meanwhile, China, India and Brazil are still trapped in high inflation. The steel sector across the globe is experiencing a slowdown in consumption. However, production continues at the same pace, thus creating a gap, which pushes steel prices down. Steelmakers have little choice in their hands except to curb output, considering the weak economic growth. Iron ore and ferrous scrap are following the steel demand, but only with a slow fall in prices, up to now. As said the month before, September has clearly stated what will be the short future we have to face.

Here in Italy the September mills production was lower than what expected due to some delays in the summer maintenances. The railway delivery, mainly from Germany, has been delayed and consequently the mill inventories are not so high as they wish. Arrivals by vessel were more or less the same of August that is to say abt 66,000 tonnes for scrap, abt 108,000 tonnes for pig iron and abt 46,000 tonnes for HBI. Scrap prices moved down about €10/15 on the weakly domestic market and about 5/10€ on the monthly import contracts from France and Germany.

Oct. 9 is an important date, not just for Sir John Lennon’s birthday, but especially for the enforcing of the new End-of-Waste rules n° 333 in the EU Countries. It seems a big opportunity for the scrap recyclers and mills, because it increases the competition and it gives a strong visibility to the operators that are transforming waste into products. But at the same time, it gives a terrible headache! It has created a two-tier market, one for sellers and buyers that follow the EoW guideline and one for those that do not. Here both mills and recyclers are involved in the fulfilment of the certified quality management system, with heavy delays. All this could affect the market for the current month, due to the difficulties in the scrap supplies.

Following are the September official average prices reported (€/per metric tonne delivered):

 
 
 






October contracts are predicted to have further prices reductions, following the general trend.

PIG IRON - H.B.I.
All the pig iron inventories (ports, resellers, mills) remain well covered, thanks to the ports arrivals. Offers are now quoted around $500 pmt Cif for November shipment. The reported arrivals of HBI cargoes are from Black Sea and Arabic Gulf. The HBI market seems very quiet now, due to the lower mills demand and also to the prices quoted in U.S. dollar.

STEEL
September will be remembered also for the lower volume of sales. Consumption and prices are suffering the slowdown of the economic growth and the negative signal for the Q4.

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