Flat steel prices are expected to reach their lowest point this summer before starting to recover in the fourth quarter. This will be driven by the European Commission’s safeguard measures review, existing quota systems, and the incoming Carbon Border Adjustment Mechanism (CBAM), according to Antonio Marcegaglia.
“Demand is structurally declining in Europe – by at least 15 million tonnes over the past six to eight years – reaching just 130 million tonnes last year,” Marcegaglia told Kallanish during EUROMETAL’s 75th Anniversary conference held in Luxembourg this week. This decline, he added, is occurring amid a broader global economic slowdown. “We must not underestimate the need to support European demand before talking about decarbonisation and trade”.
While producers have highlighted overcapacity and called for stronger border protections, Marcegaglia questions the actual extent of excess capacity in the global market. “Talking with my Chinese commercial partners I do see and I do expect a cut of 300 million tonnes capacity in the next five to eight years or even sooner, and [their] export-oriented model is no longer working,” he observed.
Marcegaglia acknowledges the need for Europe to shield its industry from unfair competition but highlights that protectionism alone cannot be the solution. “We need to protect to a certain extent but I do believe the EU, because of its nature as a re-exporting economy, needs to remain in the global supply chain actively working and not isolated,” he noted.
Referring to the ongoing global trade tensions created by US President Donald Trump, Marcegaglia conceded that chaos can work as a negotiation tool, but even the United States cannot afford to turn its back on global trade.
Europe has a structural competitive gap with Asian countries, created by high energy costs, lack of raw materials, the highest labour costs linked with being a developed economy and more developed social welfare. This gap will remain.
However, the European supply chain has a growingly sophisticated market that needs to be developed. It possess the best technologies for steel, a culture of innovation, scrap availability that is not yet fully utilised, a resilient, capillary and well-organised distribution supply chain, and social and political stability, Marcegaglia continued. If well managed, the green transition could become an opportunity.
Europe also boasts a proximity to markets in need of steel in the near future, such as the Middle East and Africa.
Marcegaglia is implementing a partial upstream integration with the acquisition of a stainless steel mill in Sheffield, UK, and the new Fos-sur-Mer hot strip mill project in the south of France. The company aims in future to reach zero debt, becoming less reliant on financial institutions, and post €10 billion ($11bn) in turnover and €1 billion in Ebitda. In 2024, the company registered €6.8 billion in revenue and €430 million in Ebitda.
Natalia Capra France
