Italian steel service centers are unable to pass rising costs on to customers, held back by high inventories and fierce competition, according to a report by industry association Assofermet.
This is squeezing margins further, while rising energy and other related costs are exacerbating the situation, the association said.
In October, downstream consumption of steel products was largely unchanged. Industry continues to see few orders, and there are still no signs of a recovery in demand that could support service center activity. Assofermet does not expect any significant change in new orders in November.
Sales prices are expected to edge up as service centers seek to offset at least some of the increase in flat steel prices. However, weak demand will limit any rise and call into question whether it can be sustained, Kallanish reports.
European steelmakers raised prices for flat steel deliveries in the fourth quarter, supported by trade protection measures. Producers appear intent on continuing this course in the first quarter of 2027. The gap between their price demands and the market’s ability to absorb further increases is widening.
The situation surrounding the former Ilva plant is an additional source of uncertainty. Italy’s Supreme Court rejected appeals against a Milan appeals court ruling that suspended hot-rolling operations in Taranto.
An Italian consortium led by Federacciai appears inclined to withdraw from the deal, Assofermet reports. The association adds that a separate sale of the plant’s assets is becoming increasingly likely.
Meanwhile, Italy’s Arvedi and Jindal Steel International submitted their own binding offers to buy the former Ilva plants. The special commissioners announced the bids.
For service centers, the possible permanent closure of Italy’s only integrated steelworks poses a risk of disruptions to flat steel availability and an imbalance in supply. Concerns are mounting amid tighter import restrictions.
Signals for distributors remain mixed. European hot-rolled coil prices are stabilizing as availability tightens and imports decline. But demand from end users in the automotive and construction industries and from appliance manufacturers is not yet strong enough to trigger a sustained price rise.
In October, distributors’ sales prices held steady and were slightly above year-earlier levels, while volumes fell by more than a quarter. Average prices rose in almost all segments.
Tighter availability is supporting coil prices, but without a recovery in industrial demand, it is difficult to sustain the increase. Selective inventory management remains the priority for distributors: the price per tonne has risen, but there are no convincing signs yet of a turnaround in volumes, Assofermet concludes.