Italy steel manufacturers look abroad to cope with ILVA crisis
Reuters reported that Italian manufacturers have started to turn to foreign makers of flat steel, fearing supply disruptions at crisis hit ILVA, their usual provider now mired in an environmental and corruption inquiry.
The giant ILVA plant in the southern town of Taranto, which makes 40% of Italy's steel, is at the centre of a judicial probe over its toxic emissions.
Magistrates ordered its partial closure in July but the crisis reached a new height last week as they seized EUR 8.1 billion in assets from the controlling Riva family, triggering the resignation of the ILVA board.
Mr Enrico Letta PM of Italy said that government is desperate to preserve the largest plant in Italy's underdeveloped south, which produces almost all of the country's flat rolled steel for the automotive, shipping and white goods industries.
With crude steel output in the European Union running at around 30% above demand, the impact of a 25% drop in output from ILVA has been limited so far. But faced with the growing uncertainty, even traditional clients have started to try to diversify their suppliers.
Mr Luigi Lion from historic client Cimolai said that "We bought around 25,000 tonnes of steel from ILVA last year and were planning to buy a further 30,000 tonnes this year but have suspended all orders because we have no certainty that they will supply us."
Mr Lion said that his group got burned in November when magistrates seized 1.7 million tonnes of steel, including some of Cimolai's. The specialist bridge and viaduct manufacturer, urgently needs the steel to complete work on gates for the extension of the Panama Canal linking the Atlantic Ocean to the Pacific.
He added that his group looked up suppliers in Germany, Austria and even India. It found the steel but faces higher transport costs, longer delivery times and, in the case of non-European suppliers, the obligation to pay upfront before delivery.
Meanwhile, carmaker Fiat, which in past years has sourced from ILVA 20% of its flat steel requirements for Europe, the Middle East and Africa, says it has been able to meet all its needs, given present ample supplies of steel in Europe.
Source - Reuters