Posted on 12 Mar 2020
The steel market in Italy, one of the countries most affected by the coronavirus, is quiet, with prices mainly stable while market participants assess developments not only in the domestic market but also in the rest of Europe, sources said.
Market sources pointed out that the virus is spreading not only in Italy but also in the rest of Europe creating uncertainty across the continent and an overall decrease in end-user demand, which is likely to result in a domino effect on the rest of the supply chain later on.
Sources say Italian steelmakers and service centers are still open, but as government measures are now being implemented to contain the virus, the market is mainly on hold, with some domestic operators planning to suspend production while others, based in the worst affected area, have already announced temporary closures.
In the province of Brescia, in Lombardy, one of the main long producers Alfa Acciai, which produces 1.5 million mt of crude steel a year, Tuesday announced it was halting production from Wednesday but would continue to ship orders received so as not to cause disruption to its customers. An Alfa Acciai executive told S&P Global Platts that the company's 400,000 mt/year crude steel mill in Catania on Sicily would continue to operate.
Local sources said that the other Lombardy-based longs producer, Valsabbia, which has a capacity of around 600,000 mt/year of crude steel also suspended production on Wednesday. The company did not respond to a request for comment.
On Monday, the Italian government announced it was extending the lockdown of the northern Italian provinces to the entire country until at least April 3. According to the latest data released by the Italian Civil Protection, 8,514 people are infected, the majority in the provinces of the northern region of Lombardy (4,427). Lombardy has the largest concentration of steelmakers and re-rollers and is where nearly half of Italy's 23 million mt/year of crude steel is produced.
Market sources are expecting further announcements of stoppages mainly from mills in the areas most affected, but some are also pointing out that the virus is spreading to other countries in Europe, where mills are likely to follow the Italian example. "I think that there will be a knock-on effect from end users to producers in the steel sector as in other sectors. But I doubt this will happen only in Italy. We have to look also at what is happening in Germany and, considering the trade relationship between Northern Italy and Germany, it is better they stop at the same time," a senior steel industry source said.
Source:S&P Global Platts
