S&P Global Platts reported the Italian steel producers which had lost 1 million to 1.3 million mt of output during the stringent four weeks of coronavirus-prompted lockdowns, have resumed production, working at around 40-50% of their capacity with most of them executing COVID-19 precautions.
The Italian government signed a decree just before the Easter break aimed at loosening restrictions made to stem the spread of the coronavirus after around four weeks of lockdown, but it did not include the steel sector. Steelmakers nevertheless started to slowly reopen the week of April 13 after local prefectures granted them permission.
Europe’s second-largest steel-producing country Italy produces about 23 million mt annually. Many of Italy’s mills stopped production during March 16-23, with ArcelorMittal Italia in Taranto, southern Italy, and Arvedi in northern Italy being the exceptions.
According to the latest data available from Federacciai, the Italian steel producers association, in March Italian crude steel production went down by 40.2% month on month to 1.37 million mt, only partially representing the lockdown period.
Automotive production and building construction are expected to resume by decree next week, but having customers is not the only problem for steelmakers. These steelmakers rely on steel scrap generation from manufacturers like automakers to be fed into their furnaces which has become difficult due to their lockdowns. Most Italian steel mills produce steel via electric arc furnace route, which requires scrap, with AM Italia being the only exception as it has blast furnaces. Sources said that with the mills working at 40-50% of their capacity, scrap will become relatively difficult to obtain for about a month.
With the easing of the lockdown, market participants are closely monitoring the scrap supply/demand balance, because these will impact raw material prices as well the steel product prices, which ultimately will impact the steelmaker profit margins.
