The current shortage of scrap in Italy is expected to drive prices higher in February, as reduced activity among steel mills during December, coupled with a declining manufacturing production is leading to significantly decreased collection rates. 

Several merchants report challenges in sourcing materials, with certain mills prepared to offer €10/tonne ($10.4/t) increases to secure specific tonnages.

"Collection is a problem for all of us. February will see a price increase, but producers’ production plans will also play a role. It has been a very slow month for the finished product in January,” a source says. 

He adds that should mills opt to decrease production next month, there could be a balance between the limited supply and the diminished demand.

Currently, there are no official announcements regarding production stoppages. However, some producers are contemplating output reductions. Additionally, some mills are now idling production for one or two days each week while also operating during nighttime hours to mitigate the impact of raising energy costs, Kallanish notes.

According to a merchant, the phone is not ringing because of the challenges in purchasing scrap and the uncertain demand from mills.

Prices are currently stable compared to the beginning of January, except for certain grades such as E40 new arisings and E8, which have shown an increase of €5-10/t in some contracts.
As they restarted work following the holiday break, mills are reported to have drastically decreased their scrap yards this month.

This week, E8 mixed grade is pegged at €325-330/t delivered on average, while the premium E8 grade was priced at around €350-360/t delivered. Domestic E40 mixed grade is at €330-340/t. 

Market participants are securing E3 at a delivered price of €310-320/t, while E1 is transacted at approximately €290-300/t delivered, sources suggest.

Source:Kallanish