The main concern is the fall in prices in January

Italian distributors and service centers believe that the spread of negative trends in the steel market for the first quarter of 2023 is likely. Eurometal reportd about it.

“The sales activity is almost in complete deadlock. Smaller well-stocked service centres are managing to sell small but steady volumes. Apparent demand, however, no longer exists, and the heavily reduced consumption, particularly for coil derivatives, is forecast to continue until the end of the year,” the report said.

The main concern is the fall in prices in January, as factories will not be able to sustain the reduced sales activity for much longer.

The situation is worsened by the decrease in prices for imported products from the Far East. Despite declining demand, Italian mills are still producing rolled steel thanks to government financial support aimed at reducing the impact of high energy prices.

The government has developed a program that allows steel companies to receive a 40% tax rebate at the end of the year, which will be calculated based on the actual energy consumption of each producer. The move is a boost to production, but at the same time creates an oversupply amid the current low level of consumption.

Due to low sales volumes, many service centers are aggressively commercial and compete with factory prices. It is noted that the only driving factor today is a reduction in inventories.

As GMK Center reported earlier, steel enterprises of Italy have reduced steel production in September 2022 by 18.7% compared to September last year – to 1.873 million tons. In January-September 2022, steel production in Italy fell by 11.1% y/y – to 16.46 million tons.