Unfortunately, the economic situation globally - as well as that in Europe and particularly Italy - has not changed since the previous Mirror. COVID-19 is still significantly affecting the life of the whole planet. Although conditions have improved in Europe and almost all the lockdowns have now ended, there is a constant fear that the virus will reassert itself through a second wave of infections.
The entire economy is therefore sandwiched between two phenomena: first, a slow recovery haunted by uncertainty and fear, with the additional factor of approaching summer closures; and second, a clear recovery plan shared by everyone.
Italy’s three main stainless steel mills have suffered a significant loss of sales volumes and, as a consequence, there has been an equally steep drop in their demand for stainless steel scrap. Tension in the domestic scrap market can also be ascribed to: reduced production owing to the crisis and the resulting drop in generation; increases in the prices of raw materials that are not valued in the scrap price, encouraging speculative behaviour among those holding the scrap; demand for some types of scrap (AISI 304 and 316) but not others (AISI 430); and a flattening of prices in Europe which prevents scrap imports into Italy.
At the time of writing, a September recovery in Italy seems somewhat uncertain; indeed, steel mills have already confirmed that an almost complete shutdown is envisaged for August and that, for the moment, production volumes in September appear very small, not least because of the major uncertainty about the extent of the measures put in place by the government to support the economy. Other factors will include easy access to credit to support the significant loss of turnover and a resumption of private consumption, which will be heavily influenced by job uncertainty. To date, there has been a ban on layoffs and so the true depth of the crisis has yet to be fully understood.
All the signs suggest a recovery is likely only from October.
