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The Italian non-ferrous metals sector: what's new?

Issued at 2013-02-21



Since our previous Mirror was published before the year-end holidays, there has been very little activity in our sector. Effectively, producers closed down for three weeks and activity re-started after January 7. Even then, buying proposals had to go through a "running-in" period of around a week before industry effectively came back to life.

Therefore, only a few days have passed since the effects of consumers' return to work slowly began to be felt.
Sentiment had turned pessimistic with the weakening of the LME; when this unexpected change took place, everybody was anticipating the boost in purchases which normally occurs when market conditions weaken and buyers jump in to take advantage of the lower-priced opportunities. But this did not happen.

Our industry's general situation is not easy to describe given that little time has elapsed since physical activity recommenced. Most metals have seen their prices rise on the LME, spurring the industry to accelerate its purchases at a much faster rate than would have been the case if prices had remained unchanged immediately following the holidays.

However, there is still confusion because industrial production remains more than 40% below the norm. Scrap is scarce domestically and prices of imported scrap have become a problem following the strengthening of the Chinese market. Despite the approach of the Chinese New Year holidays, buyers in that country seem to have a much stronger interest in purchasing right now; this is probably to avoid surprises once they return from their holidays and realise prices quoted by them are obsolete following an increase in the LME during their period of absence.

Italian consumers are struggling firstly to find scrap and secondly to pay the desired prices; in the end, however, they are forced to succumb to higher offers if they wish to satisfy their production requirements.
Exports, on the other hand, are performing very well and the Italian economy is benefitting from the high volume of metal products leaving the country's shores.

Lead and zinc scrap are faring better than copper grades, and the same can be said for stainless steel scrap, which obviously has suffered slightly as a result of lower nickel prices but which has maintained a position of strength in the market. Aluminium scrap is mainly concentrated on all grades used in the production of secondary ingots: turnings cast and frag. Meanwhile, the downtrend has continued in the aluminium profiles sector as a result of the very weak building industry.

(by Fernando Duranti, Leghe & Metalli International S.r.l.)


Source: BIR World Mirror



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