Italian steelmaker Acciaierie d'Italia (ADI) is running low on raw materials at its Taranto site, as the company and market participants wait to see if the shutdown of the hot melting area will go ahead.
The company was ordered by a court to close the hot end at the end of July due to environmental infractions. Since then, it has ceased with new raw materials purchases, a source at the company said. There are enough raw materials for operations to run until the end of September and cover existing steel orders, they added.
One trader estimated that the steelmaker has about two weeks of production left before the site runs out of raw materials. "They have failed on their [raw material] contracts for months [...] anyone who has steel term contracts with ADI is going to be left disappointed", the same source said.
Government meetings regarding the future of the company are scheduled for next week, and a final decision from the court is expected by 16 September.
ADI's potential stop to production comes in the context of ongoing negotiations about its sale with several interested parties. The latest party to submit a bid for the former Ilva assets was a consortium of Italian companies, led by steel association Federacciai. The bid, however, included only the cold end of operations. Indian steelmaker Jindal is understood to still be in the running, as is US equity firm Flacks Group, and a few other parties.
Talk in the market this week suggested that some of the bidders, likely Italian-based companies, which rely on purchasing coils on the open market, are looking for slab supply to ADI and use the company as a tolling service. ADI is in negotiations with a re-roller for a 100,000t/month slab supply in exchange for tolling services, a company source said.
