It is now absolutely clear that Europe is gripped by a deep crisis involving many sectors. First and foremost, the automotive industry has dragged down many other sectors, resulting in a big impact on the steel industry. If we jump back just a year, we realize how the situation has been turned upside down. In 2018, Italian steelworks were struggling to fulfil all their orders whereas this year they are unable to place their production even where very small tonnages are involved.
All this has also been accompanied by the collapse of both iron and chrome prices. Nickel alone has registered a big increase over the recent period, but unfortunately without influencing in any way the demand for stainless steel or even operators’ profits. In fact, scrap traders are seeing weaker sales conditions with each increase in the nickel price, while steel mills are unable to sell the quantities produced at higher prices.
All service centres are ordering as little as possible, using up their stocks while waiting for prices to fall. Indeed, service centres feel even further penalized: on the one hand, prices of coils are increasing and, on the other, the sale of scrap resulting from their processing is seen to be less valued.
This crisis is likely to last throughout the next quarter, or at least until the initial impact of safeguard measures coming into effect on October 1. Change will happen only when all the stocks imported into Europe from the Far East have run out and consequently European producers will be able to return to selling without having to worry too much about the low cost of nickel pig iron.
Nickel’s high value has not increased the cost of scrap, partly because of a lack of demand for the latter from China and India. This will enable procurement of scrap at highly competitive prices to help a production recovery in Europe in this year’s final quarter.
