Coronavirus outbreak in Italy: Aluminium ingot and billets market players bracing for the worst, current week remains steady

Coronavirus epidemic has broadly affected Italy within the European nations. As on 10^th March’20, more than 10,000 cases and more than 600 death deaths have been registered.

The country has initiated emergency measures which includes travel restrictions and the banning of public gatherings, in a bid to stem the growth of infections in the country.

Italy stands as one of the largest aluminium markets in Europe. As of 2018, it consumed around 950,500 tonnes.

Italy is considered as the home of the two major European hubs for aluminium distribution: the port of Genoa on the northwest coast; and Italy's easternmost port in the north, Trieste.

The aluminium industry in Italy continues to operate, despite the restrictive measures.

The Italian government had elucidated to the companies that goods may enter and leave the territories throughout Italy and the transportation of goods is considered a work requirement. This means aluminium traders can currently work as normal, and warehouses, plants and smelters remain open for business.

On 10^th March’20 a major London Metal Exchange-listed warehouse in Italy told its customers there was no disruption in the country and those warehouses and terminals were in no way affected.  

A consequential amount of aluminium in Italy is sitting off-exchange in warehouses or at the ports. Though there are more than 27,000 tonnes in Trieste spread across three warehouses, with 17,000 of this stock at P Global Services warehouse. There are also 8,310 tonnes at Access World in Leghorn and just less than 1,000 tonnes at Steinweg in Genoa.

The Italian market players said there had been minor logistical erupts, such as having more difficulty in finding enough truck drivers and having to pay more for freight, but not to the extent premiums have been affected in the region.

With most logistics still unaffected, however, premiums remained steady across the supply chain in the region.

The aluminium premiums have been so far steady, but the country’s fast-changing response to the outbreak is creating panic for the market players in the coming weeks.

There is a forecast that Italy’s travel restrictions, and the potential for more rigid lockdowns related to the transportation of goods, could put a dent on the country’s economy and thus regional premiums.

The outbreak, and the country’s response, has stoked bearish expectations for most market participants.