EU HRC: Ilva uncertainty makes buyers take pause

European coil prices stabilised today as uncertainty surrounding ArcelorMittal's Taranto plant ate into buying appetite in Italy.

Local press reports today suggested the company was willing to recommit to Ilva, provided a number of conditions — including the return of immunity from prosecution and ability to cut jobs — were met.

The company, which recently told unions that it would be idling all the site's blast furnaces by 15 January, refused to comment on the report.

Two other mills in Italy offered €400-410/t ex-works, but buyers did not pile in, given the uncertainty. Imports from Turkey were available at €425-430/t cfr, but those that did not need to buy out of necessity waited. Some larger buyers that have been more exposed to Ilva scrambled to find replacement material, if they had not previously rerouted orders to other ArcelorMittal plants.

Some buyers were still awaiting offers from northern mills, but primarily for higher-grade material. Italian service centres have secured sheet price rises of about €10/t in the past week or two, but are struggling to pass on further cost increases given subdued demand.

Mills in the north have started telling customers about €30-40/t increases — although none seem to be formally announcing — but again, buyers are not piling in. While a raft of seemingly positive factors supports the increases — such as firmer import pricing, production cuts and the potential closure of Ilva — some buyers view the rise as mills trying to gain leverage in difficult contractual talks. Nevertheless, some buyers have started discussing contract volumes with service centres, sensing it is the right time to buy.

Argus' daily Italian index was stable today at €400/t ex-works, while the northwest index was also unmoved at €412.25/t ex-works.