Stainless steel

Economic factors and a low level of orders affect service center margins

Economic uncertainty and low order levels are affecting the margins and order volumes of Italian stainless steel service centers. The industry association Assofermet, which represents Italian distributors of scrap, raw materials and steel products, warned about this, Kallanish reports.

The sector is experiencing the sharpest margin contraction in 2023, which has intensified over the past three months. According to Assofermet, on the one hand, there is a decrease in demand for stainless steel, and on the other hand, there are requests for price increases from steel mills.

In Italy, inventory levels of these products remain high, but they are normalizing. Operating costs are also rising, which prevents a full recovery in prices.

The first half of 2023 was generally positive for steel mills, both in terms of production volumes and margins, said Alessandro Bettuzzi, coordinator of Assofermet’s stainless steel service centers. At the same time, steel consumers are having difficulty planning and scheduling purchases. The uncertainty in the current market, caused by inflation, among other things, makes them cautious about both stainless steel consumption and investments.

This year, the Italian stainless steel market (both long and coiled) experienced a sharp slowdown. Despite a slight increase in coil sales in September and October, service centers and re-rollers were unable to pass on the price increase to further customers.

As GMK Center reported earlier, Italian stainless steel producer Acciai Speciali Terni (AST), part of the Arvedi Group, suspended production for three days. The decision was made amid a decline in orders in the EU market following an improvement in demand in September-October. On November 28 this year, the hot section of the plant was suspended, and production is scheduled to resume on December 1.

As GMK Center reported earlier, global stainless steel production in January-June 2023 decreased by 1.7% year-on-year – to 28.44 million tons. This is evidenced by data from the International Stainless Steel Forum. During this period, Europe, including Ukraine, reduced stainless steel production by 13.4% y/y – to 3.14 million tons.