Ylva's Main Blast Furnace Closure May Raise HRC Prices in Europe

With the closure of the Ilva Group's main blast furnace, some market participants expressed the view that this could help support higher prices in Southern Europe and cause them to rise significantly in the near future. The Ilva plant in Taranto is the largest metallurgical plant in Europe, equipped with five blast furnaces.

Operations to shut down the main blast furnace at the controversial Ylva steel mill were completed on Friday. The largest blast furnace in Europe, which guarantees 40 percent of the plant's pig iron production, will be closed for renovation within 12 months. The plant's management decided to keep the blast furnace operational until this year, despite a court order for an immediate shutdown, which was issued in July 2012 due to environmental violations. The workers will be provided with "solidarity contracts", they will join the ranks of another 1,300 employees with whom this type of contract has already been concluded for the reconstruction of four more blast furnaces at the plant.

Slow market activity in Southern Europe amid declining supplies of Ilva may have an ambiguous effect on coil steel prices in the region. Doubts remain as recent disruptions in several factories in the region have not raised prices significantly. The weak euro continued to keep importers at a distance, but domestic producers are still unable to raise their prices. Trades are carried out in narrow ranges established at the beginning of the month.

Ilva Group's products include hot rolled coils, cold rolled coils, coated metal, heavy slabs and various welded pipes. The consumer of these products is the construction industry, the automotive industry, shipbuilding, energy (both traditional and alternative sources), household appliances, chemicals and petrochemicals.