Two more Italian steel mills shut down, further closures possible, sources say

Two more steel producers in Italy have stopped operations following the recent nationwide extension of the country’s coronavirus-related quarantine area, and more stoppages were expected, sources told Fastmarkets on Thursday March 12.

On March 11, Italian Prime Minister Giuseppe Conte signed a decree tightening the Italian lockdown from the conditions set out in a previous decree on March 9. While there were no explicit measures to restrict or stop steel production, some mills made the decision to shut down their facilities anyway.

The decree was intended to restrict the spread of the 2019-nCoV coronavirus infection and will be in force from March 12 until March 25, 2020.

Italian beams producer Duferdofin-Nucor stopped “activities at the plant in San Zeno Naviglio [in Brescia] due to the spread of coronavirus in the area, starting from [March 12] at 2pm [Italian time],” the company said. “This is a preventive measure adopted in order to further protect the safety of colleagues and workers in all areas and offices.”

The mill has capacity for 800,000 tonnes per year of crude steel.

Tube-rolling mill Tenaris Dalmina was reported to have stopped production on March 12 as well. The company had not responded to a request for comment by the time of publication.

Tenaris Dalmina has capacity for 650,000 tpy of tubes.

Earlier, on March 11, two major long steel producers in Brescia, Alfa Acciai and Ferriera Valsabbia, stopped production.

Concerns about further stoppages grow
Merchant bar and sections producer AFV Beltrame confirmed to Fastmarkets that it was continuing to run its production processes. “All office-based workers are now working from their homes, but production continues for now, although at reduced rates,” a source close to the company said.

Pittini Group, one of the major long steel producers in Italy, said that all of its mills were currently operating at normal rates, but a so-called “smart office” approach had been applied to all office workers. “All our office-based workers are now working remotely,” a source close to the company said.

In the meantime, transportation problems remained a concern because logistics issues were likely to escalate and affect production. “Logistics is heavily affected,” one producer told Fastmarkets. “We are producing today, but tomorrow or in two days’ time, we might be [short of] raw materials. It is unpredictable.”

No logistics problems have been heard when material was shipped either by rail or by sea, however. The logistics problems that have been noted so far have mostly affected shipments of flat steel materials by road.

A further uncertainty was that possible upcoming changes in regulations from the Italian government regarding quarantine measures have resulted in a decrease in market activity.

Italian rebar producer Feralpi said that “the situation is very changeable and each company is making its own decisions day by day.”

Market sources said that scrap collection volumes have gone down drastically in Italy due to the coronavirus measures, so mills might soon encounter problems with raw material availability.

Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, delivered Southern Europe, was €435-450 ($492-509) per tonne on March 11, narrowing downward by €5 per tonne week on week.

The corresponding weekly price assessment for steel wire rod (mesh-quality), domestic, delivered Southern Europe, was €450-470 per tonne on March 11, widening downward by €5 per tonne week on week.

Flat steel production unaffected
In the meantime, all flat steel producers in Italy continued to operate as normal, although the logistics problems were mounting, market sources said.

Some buyers of Italian coil in Germany and Austria have been complaining about delays and disruptions affecting orders arriving by truck. These problems were reported by market sources to be caused by a lack of truck drivers and complicated procedures at border crossings.

The sources believed that if the problems with logistics escalate, they might result in production disruptions as well.

Fastmarkets’ daily steel hot-rolled coil index, domestic, exw Northern Europe, was €482.50 per tonne on March 12, up by €1.50 per tonne day on day from €481.00 per tonne on March 11.

Thursday’s index was calculated based on deals and “workable” prices heard at €475-490 per tonne ex-works.

Fastmarkets’ weekly price assessment for steel HRC, domestic, exw Southern Europe, was €435-450 per tonne on March 11, compared with €440-450 per tonne a week earlier. The assessment was based on deals heard in the market.

Some market sources also believed that the lower availability of Italy-origin coil in the north of Europe, due to the logistics issues and the generally higher risks related to ordering new material from the southern country, could support domestic prices in Northern Europe.