Italian service centers report improved demand and import uncertainty
Sources at Italian coil service centers report stable consumption in the second quarter, with signs of recovery following a decline in demand in the previous 12-18 months. However, there are concerns about the ability of buyers to obtain materials due to import restrictions.
One of the well-known sources in the company reported an increase in orders over the past three weeks from large purchasing groups, which forecast improved performance in the 2nd and 3rd quarters.
Sales volumes of service centers in the first quarter were largely in line with last year's figures, which were already characterized by weakness, indicating continued tension and uncertainty in the market. The main problem is still weak fields, which are not sustainable in the long term.
"Given the disparity between selling prices and purchase costs, no operator in the market can effectively cover their costs without resorting to speculative strategies based on purchases made in the past. Our business lacks a balanced structure in terms of its profitability," says a Kallanish source.
Several representatives of the Assofermet distribution network told Kallanish about this at the Made in Steel event earlier this year. Their purchase costs have increased dramatically in recent years, and they have been paying very high fees for imported materials. Their limited ability to diversify roll purchases in third countries and European markets puts significant pressure on the profitability of service centers.
"It is impossible to block the import. The EU can redirect them and change the geography of trade. At this stage, EU producers will benefit, but in the medium term, imports will return in a modified form," the second source notes.
Distributors have only partially abandoned the price increase for rolls. In 2025, the sector"will have to fight to recoup its costs, Volumes are not helping us, and we will have to play with the timing of purchases and sales, taking risks. End users are giving some moderately positive signals, but they should be confirmed over the next few months," the source adds.
The third service center highlights the challenges faced by the manufacturing sector in preparing for the upcoming introduction of new technologies. The Carbon Boundary Regulation Mechanism (CBAM) is a complex instrument that is currently being reviewed in Europe. In Europe, there is a noticeable shortage of galvanized materials of certain sizes and quality grades for the automotive sector.
"I am in the process of ordering a galvanized