Italian iron rises as EU exhausts Russia quota

Italian pig iron asking prices are on the rise, primarily influenced by a scarcity of alternatives to supply from Russia. A Ukrainian producer is offering pig iron in Italy at $450-460/tonne cfr and negotiating with distributors.

The EU’s 700,000-tonne annual quota for Russian-origin pig iron, valid until 31 December, has already been depleted, Kallanish notes.

Another Ukrainian producer is absent from Italy, preferring to sell in the US at about $470/t cfr. Last month, a distributor participated in negotiations concerning Brazilian pig iron, with pricing at around $470/t cfr. However, it remains unclear if these discussions have culminated in a sale.

Italian foundries association Assofond reports the market is experiencing stagnation, while costs for foundries and steel mills continue to rise. The foundries sector experienced a significant decline in both production and turnover last year. According to one source, Italian buyers are assessing alternatives from neighbouring countries for future pig iron procurement.

“We find ourselves in a situation never seen before, with energy prices skyrocketing, while at the same time market demand is drastically declining,” Assofond president Fabio Zanardi says in a note. “In 2022, at the height of the energy crisis, we had solid demand and significant support from tax credits.”

“Today, we are in a completely different situation, and we are no longer able to sustain the competitiveness gap that separates us from our main competitors. It is increasingly urgent to intervene at a European level to harmonise energy prices and breathe new life into the continent's entire manufacturing industry,” Zanardi adds.

Meanwhile, with the EU's Russia pig iron sanctions quota for 2025 exhausted in just two months, at least 100,000 t/month of Russian supply – previously sold in the EU – is likely to be redirected to Turkey. With no EU quota left and no room for domestic reallocation, excess volumes in Turkey are expected to put downward pressure on prices (see Kallanish 27 February).

Source:Kallanish