Antonio Gozzi: Italy market outperforms neighbours, inflation remains problem

Steel sales, which are an economic cycle indicator, are currently performing better in Italy than in France or Germany, according to Duferco Italia president Antonio Gozzi.

“When the cycle slows, steel demand slows and we are in a weaker phase, but I am not at all pessimistic,” Gozzi told Kallanish on the sidelines of this week’s Made In Steel tradeshow in Milan.

Inflation however is being stubborn. “Interest rates at 5% reduce investments. Between 40% and 50% of steel consumption is based on fixed asset investment ratio, which is responsible for steel demand. In China, the fixed asset investment ratio is still at 50%, in the USA it is at 17% and in Europe at 11-12%,” Gozzi observed.

However, while demand for long products remains weaker than last year, northern European producers are being less flexible than their Italian counterparts at reducing capacity utilisation. “The theme today is to manage to keep costs under control, also with production reduction,” Gozzi said.

In Europe, installed sections capacity is about 11 million tonnes/year, for 6m t/y of consumption. Key to producers’ success are plant location, optimised energy and raw material costs, and good logistics, Gozzi pointed out.

Duferco will start production tests in mid-June at its new mill in San Zeno Naviglio, northern Italy this month for an inauguration in September. The mill will be one of the most technologically modern and green in Europe with a strategic location that will enable it to reach other European destinations easily. This will be facilitated by its railway connection and proximity to the motorway.

“We have realised the dream to integrate the steel mill and the rolling mill because the steel mill was standalone and we used to ship blooms outside, while we now produce and re-roll in-house. The steel mill today is super-efficient. We are working on average with approximately 32 or 33 castings per day … We are on course to produce 950,000-980,000 tonnes/year initially, including the new mill’s capacity of approximately 700,000 t/y, and output from the facility in Pallanzeno and the one in Giammoro, in Sicily,” the executive continued.

In Giammoro the company is implementing investments into sustainable energy capacity and improving its dock to enhance the facility’s logistics activity. Thanks to its port location, the Sicilian facility has “an overseas vocation. We have always used that rolling capacity for export”, Gozzi explained.

Duferco is also investing in an upgrade of its Pallanzeno mill in northern Italy. The steelmaker has placed an order with technology company Steele for a new cut-to-length line for sections. The company’s objective is to enlarge its product range and improve quality.

Duferco is Italy’s main producer of sections. In December 2020, the company and former American partner Nucor ended their partnership in the joint venture for Duferco’s Italian operations. The Covid-19 pandemic and consequent cut in Nucor’s overall investment budget was at odds with Duferco’s intention to proceed with the investment in San Zeno (see Kallanish passim).

Natalia Capra France