IREPAS Short Range Outlook : November 2024
Gloomy demand picture prevails in global longs market, but possible bright spots on horizon
The supply and demand balance in the global long steel products market is being impacted strongly by low demand and it is reasonable to expect that, if the US introduces new market protection measures, other countries will follow. There is simply not enough demand in the world for all the steel produced. Despite the overall gloomy scenario of mostly insufficient demand, on the bright side China has continued to announce measures to stimulate its economy, while the incoming Trump administration could take steps towards ending the war in Ukraine and bringing about a ceasefire in the Middle East, which would boost the steel markets.
Chinese exports to continue, impact of stimulus measures remains to be seen
The global long steel products market is looking to find ways to extricate itself from the desperate situation it is in. Unfortunately, exports from many countries, starting with China, are not helping at all. While production in China drops, its consumption declines even more, and so its exports increase. China has introduced stimulus packages and measures to resolve the problems of its weak real estate and construction sectors and excess steel production capacity. In China’s most recent stimulus package, financing of RMB 10 trillion ($1.4 trillion) will be provided to enable local governments in the country swap debts at high interest rates with debts at lower interest rates, which is intended to bolster economic activity nationwide. Nevertheless, the Chinese are on their way towards a record year of exports and will export more this year than the total steel production of the US and Canada combined. It remains to be seen whether this situation will change in 2025 under the impact of the stimuli the government has announced. China may indeed need to take further action, similar to the situation in 2016, and it is best if such action is taken before the Chinese New Year holidays.
US remains bright spot in terms of demand, India to see strong rise in steel consumption
The US remains a consistent source of demand in the world. China’s share of global exports and its trade surplus, meanwhile, have hit a new high. It is not a healthy situation and the US will be taking measures to curb Chinese exports. Looking forward to 2025, it is worth pointing out that worldsteel expects 1.2 percent growth in global steel consumption next year, with a 4.2 percent increase foreseen in developing countries, excluding China, while steel consumption in India is predicted to rise by 8.0 percent and consumption in the developed world is expected to grow by 1.9 percent. In particular, the increase foreseen for India is especially noteworthy.
EU market depressed by low demand, overwhelmed by imports
The EU is suffering from low demand and is overwhelmed by imports. Quotas expire very quickly from the day when they are opened and new exotic suppliers have been finding their way into the EU market.
Outlook for Europe and Germany deteriorates
Europe, and in particular Germany, is in a recession. Finally, all the rules and regulations imposed by the EU and the German government over recent years, combined with great geopolitical uncertainty and stagnating international economies, have hit Europe with full strength. What was expected six months ago is finally reaching the man in the street, who is now feeling that the times of non-existent unemployment are coming to an end. Investments are reduced in all fields of the economy and private spendings are at an all-time low, despite the high salary increases of the last two to three years.
Building industry experiencing a tsunami of empty order books
The building industry is experiencing a tsunami with order books as empty as they were 15 years ago. Unfortunately, no light at the end of the tunnel is anticipated in 2025. Such a consolidation in the cut and bend industry in Germany has never been seen and it seems like this is only the beginning.
All eyes on US after Trump’s re-election
After the recent US election, moves to “get America going again” are expected to be seen. Tariffs are on the table and if equally distributed they may create opportunities for the countries already struggling under the Section 232 duties. However, apart from Mexico, other exempt countries may not receive additional tariffs for their steel. Other products like automobiles, wine, etc., may be affected. China will be the biggest loser in terms of future export opportunities to the US. For this reason, it may be more aggressive in its export strategies without worrying about the global reactions. As for US steel, in the short term, US steel prices will go up with the anticipation of new duties. The easing of interest rates will also stimulate the domestic construction industry. However, the situation may level out by the second quarter next year. Additionally, on the positive side, there are hopes that the new Trump administration will focus on bringing the war in Ukraine to an end, and could also step up efforts to bring about a ceasefire in the Middle East. Such developments would have a huge impact in terms of regional security and provide a strong boost to economies and markets worldwide.
Interest rate cuts offer some hope
On the other hand, interest rate cuts have started in some economies and they may push up commodity prices further if they are continued. In particular, some Europeans are hopeful that business will pick up in 2025.
Markets undergo further fragmentation
There has been a further fragmentation of the markets. Aggressive competition is observed in open markets and fair demand in domestic markets. Competition inside the US is heating up as some products are unable to contribute to fixed costs. Mills in the EU are competing hard with each other to grab every ton available as long as their sales manage to cover their costs. Competition from imports is getting weaker and weaker in the EU as international prices do not attract buyers due to the very small advantage compared to domestic prices and with long lead times making imports too risky.
Unstable and fluctuating global market to continue to face lack of demand
Under these circumstances, the global long steel market can be described as unstable and fluctuating as there is a lack of demand. Unfortunately, the outlook for the market is not so bright, as it still points out to a continuing lack of demand and further fluctuations.
European HRC prices remain largely unchanged amid slow trading
Fastmarkets calculated its daily steel HRC index domestic, exw Northern Europe at €558.33 ($598.39) per tonne on Monday, down by just €0.42 per tonne from €558.75 per tonne on November 8.
The index was up by €0.83 per tonne week on week and by €8.75 per tonne month on month.
Offers for the first quarter of 2025 were heard at €600-620 per tonne ex-works.
But according to Fastmarkets’ sources, even lower levels could be negotiated for this period at €570 per tonne ex-works.
Some small volumes with December lead times were booked at €530 per tonne ex-works, Fastmarkets understands.
Buyer estimations for the workable market level were at €550-560 per tonne ex-works.
“Demand remains very weak,” a buyer source told Fastmarkets.
“Currently, bookings are very limited. People have already purchased what they need for the first quarter of 2025 and the market is quiet again,” a second buyer source said.
Prices could even decrease slightly if bookings do not increase, according to the second buyer.
In Southern Europe, Fastmarkets calculated its daily steel HRC index domestic, exw Italy at €552.00 per tonne on Monday, down by €0.50 per tonne from €552.50 per tonne on Friday.
The Italian index was down by €3.00 per tonne week on week, but up by €7.00 per tonne month on month.
Italian suppliers offered HRC with lead times of five to six weeks at €570-580 per tonne delivered, which nets back to €560-570 per tonne ex-works, according to sources.
Buyer estimations were lower, at €540-550 per tonne ex-works.
For first-quarter delivery HRC, price ideas were around €620 per tonne delivered (€610 per tonne ex-works), but no deals have been reported at these levels yet.
Import HRC offers remain uncompetitive in Europe, Fastmarkets heard.
HRC from Turkey was on offer at €580-600 per tonne CFR to Italy, including the anti-dumping duty, while offers from Asia came in at €550-570 per tonne CFR.
Producers hope that limited imports and a stronger reliance on domestic suppliers will support a price rebound in the first quarter of the next year, but low demand remains a main concern, Fastmarkets understands.
Liberty Steel announces restructuring plan for Speciality Steel UK division
Liberty Steel has announced a transformative restructuring plan for its Speciality Steel UK (SSUK) division, marking a significant milestone in the company’s recovery strategy. This initiative aims to alleviate the company’s debt burden and position SSUK for future growth.
The plan has garnered support from major customers, ensuring stability in SSUK’s order book during the transition. Notably, the restructuring will not affect employment levels within the division.
Jeffrey Kabel, Liberty Steel’s Chief Transformation Officer, emphasized that the plan is essential for creating a robust specialty business, allowing the company to focus on high-value products for the aerospace, defense, and energy sectors.
“After making significant progress to stabilize the business and refocus it on high value specialist products, we’re now addressing the debt position of the company to create a stronger specialty business going forward.”
Jeffrey Kabel, Chief Transformation Officer of Liberty Steel Group, said: “Our plan, which is backed by customers, is the best route forward for all stakeholders and we’re confident in winning the support of our creditors for the essential actions required to complete SSUK’s recovery.”
The proposed changes will be presented to creditors through a court process, offering them a chance to vote on the plan, which is critical for avoiding insolvency and fostering long-term viability.
The SSUK division operates across sites including Rotherham, Stocksbridge and Brinsworth and it produces high value steel.
The company, part of Sanjeev Gupta’s GFG Alliance, was hit by the collapse of Greensill, that was the principal financial backer of GFG Alliance with the company that at the end of March signed a framework with its major creditors to consolidate its UK steel businesses under a new entity.
Platts, part of S&P Global Commodity Insights, assessed UK HRC at GBP520/mt basis DDP West Midlands Nov. 7, up GBP5/mt on the week.
SSAB calls on policymakers for common emission standards
Swedish steelmaker SSAB is to call on policymakers to implement common emission measurement rules during the upcoming United Nations Climate Change Conference, COP29 in Baku, Azerbaijan, Kallanish notes.
The company says in a statement there are several promising proposals for establishing a common standard on near zero-emission steel. It is now calling for policymakers to take the next step and enact common emission measurement rules.
“Trade rules also need to focus on the sustainability aspects of the material rather than blanket tariffs,” the company adds.
It says it supports the Steel Standard Principles which were previously launched at COP28.
“SSAB believes that ambition and speed in the climate transition must increase. We need to phase out fossil fuels and it must cost to emit. Global carbon pricing mechanisms and common emission standards are needed to set the foundation for faster industrial decarbonisation,” says Martin Pei, chief technology officer at SSAB.
“Creating internationally accepted trade rules for near zero-emission steel products would allow for significant global CO2 emissions reductions by incentivising the roll-out of clean steel production technologies,” Pei adds.
The firm adds that policymakers should commit to Nationally Determined Contributions (NDCs) that provide clarity on the path away from fossil fuels and that enable investments in green technology.
SSAB is seeking to decarbonise its steel production in Sweden via the Hybrit project, which it established with mining company LKAB and energy company Vattenfall to produce fossil-free sponge iron.
Carrie Bone UK
Costs, competition hamper European carmakers; eye new launches
European carmakers have been struggling amid high production costs, severe competition, and stagnating electric vehicle (EV) demand in major EV markets.
In September, Volkswagen lowered its 2024 outlook, citing a “challenging market environment and developments that have fallen short of original expectations.” Later, VW confirmed it is planning to close at least three plants in Germany as part of cost-cutting measures, the first domestic plant closure in Volkswagen’s 87-year history.
“Our nine-month results reflect a challenging market environment and underline the importance of delivering on the performance programmes we have launched across the company,” said the group’s financial officer, Arno Anlitz. “A significantly improved order intake in Western Europe in Q3 year-on-year is testament to our strengthened product line-up, from combustion engine cars to hybrids and full-electric vehicles, and provides tailwind for the final quarter.”
The Volkswagen Group expects deliveries to customers to be around 9 million vehicles this year compared to 9.24 million in 2023. Revenue is projected at around €320 billion compared to €322.3 billion last year.
Audi Group, part of VW, does not provide any forecasts regarding market demand. However, it notes its production is flexibly based on the market demand of the respective model.
“Regarding the supply situation, we can see that the supply situation on semiconductors will stabilise over the course of 2024, both in terms of the number of critical semiconductor types and the quantity available,” it tells Kallanish. “Nevertheless, we must continue to prepare for demand peaks and see the risk of a broader undersupply as early as the end of 2025. An easing of the supply situation depends largely on the semiconductor industry.”
Audi adds it has been working in partnership with its steel suppliers for many years and has concluded framework agreements with them. “Both the direct procurement of steel and the indirect purchase by the suppliers are guaranteed by longer-term contracts with the steel mills,” it adds.
Skoda Auto is meanwhile bucking the trend, outpacing the overall European market. Deliveries to customers in the first nine months of 2024 increased to 671,300 vehicles, up by 4.5% on-year. This growth was supported by a strong third quarter, with 222,700 vehicles delivered, up 6% on-year.
Mercedes-Benz Group generated solid sales in Q3 despite product transitions, a challenging market environment and fierce competition, particularly in China.
“The assumptions regarding the economic situation and the development of automotive markets continue to be characterised by a degree of uncertainty,” Mercedes said. “In addition to unexpected macroeconomic developments, uncertainties for the global economy and the business development of the Mercedes-Benz Group may arise in particular from geopolitical events and trade policy. The outlook regarding the growth of the world economy continues to be rather modest with regional differences.”
The US economy remains robust, while economic growth in the eurozone is expected to stay below average. However, in China, the recently announced monetary and fiscal stimuli should revive growth somewhat during the rest of the year, Mercedes forecasted.
Stellantis reported Q3 consolidated shipments of 1.14 million units, down 279,000 or 20% on-year. The period saw production gaps in several models as the firm began a global product transition. It also implemented North American inventory reductions and was hit by headwinds from a challenging European market environment.
Net Q3 revenue of €33 billion ($35 billion) fell 27% compared to Q3 2023, primarily due to lower shipments and unfavourable mix, as well as pricing and foreign exchange impacts.
Renault Group’s revenue increased in January-September by 8% on-year to €37.7 billion.
“Our Q3 revenue is starting to benefit from our unprecedented product offensive, with ten new launches this year, representing 18% of our invoices over the quarter,” said company chief financial officer Thierry Pieton. “This trend will continue over the next quarters in line with the gradual introduction of vehicles on their respective markets and will accelerate further with the seven new launches planned for 2025. This appealing and competitive line-up, with both electric and ICE & hybrid vehicles, demonstrates our flexibility to adapt whatever the pace of EV transition and remains a key support for the Group’s performance together with cost reduction.”
Gestamp’s earnings declined on-quarter and year-on-year in Q3 and the nine months through September. The short-term outlook remains extremely challenging due to declines in production volumes, uncertainty and volatility in Europe given the slowdown in electric vehicle penetration, and the negative impact of foreign exchange, it noted.
Most carmakers did not provide details of future production programmes or targets when asked by Kallanish.
Svetoslav Abrossimov Bulgaria
Italian longs prices flatten in weak market
The stagnation in the Italian long steel market is intensifying, with the absence of improvement and low margins compelling several mills to cease operations this month. There are also plans for extended shutdowns during December, sources tell Kallanish.
Several longs producers are currently operating at 50% of their capacity. One has closed at least one of its facilities in November due to insufficient orders. No products are immune from the downturn, including speciality steels, which demonstrated better performance until the summer.
Longs prices seem to remain stable month-to-month; however, consumption levels are underwhelming. Multiple mills are planning to execute stoppages also during the first week of December.
The Italian merchant bar sector is facing significant challenges as a result of weak order volumes. The market is seeing pricing stability, however, as the main producers are effectively holding their position in the face of declining bids.
The current price range for domestic merchant bar stands at approximately €280/tonne ($301/t) delivered, equating to €700/t, including size extras.
The improved demand for sections seen in recent months amid reduced availability is experiencing a decline in momentum as the market moves into November.
The supply of beams is projected to remain significantly constrained. Sources indicate prices for the first category are at approximately €800/t delivered.
“Production halts in December will be longer than the usual two weeks. Several mills are considering four-week stoppages to balance demand and supply. There is a general stability in longs prices, but increases are hard to pass on,” a source comments and confirms the continued weak sales volumes.
Sources indicate ArcelorMittal’s long and flat products distribution branch in Bologna, Italy, is set to permanently close on 31 December. Customers have been notified of the decision and reassured about the status of pending deliveries. The steelmaker’s other distribution hub in Flero, Brescia, continues to operate (see Kallanish passim).
European long steel producers are under severe financial pressure that could compel them to potentially close or divest certain facilities if the ongoing market downturn and lack of state support continue, several regional mill sources say.
Natalia Capra France
Bureaucracy counteracts EU low-emission transition intentions: AIST conference
European regulation and bureaucracy are counteracting the region’s own good intentions to be a leader in the transition to cleaner steelmaking, according to panellists at last week’s AIST European Steel Forum 2024 in Essen.
Bettina Hübschen of the state of Saarland’s hydrogen-promoting agency, Saarländische Wasserstoffagentur, bemoaned the scale of regulation facing the market.
“We have succeeded in over-regulating a market that does not even exist,” she told delegates at the conference attended by Kallanish. “We need to give companies room to breathe,” she added, noting the complicated funding landscape in the region. “There are various schemes but [it is] very complicated for the companies to understand ‘what is right for me’.”
She also noted the long timeframe for applying and awaiting the outcome of the funding decision, which could take years, slowing down the process.
Other panellists concurred, with René Gissinger of Pipe GmbH saying: “We need to allow the market to do its job.”
He called CBAM a “horrible thing”, adding: “The ambition is high, but the execution is low.”
Gissinger nevertheless supports the drive towards CO2-reduced steels, as he hears customers asking for it. “Steel needs to turn green not to stay a dinosaur,” he asserted.
Meanwhile, Nicole Voigt of Boston Consulting Group warned not to get lost in easy “regulation-bashing”. During her research regarding CBAM, for example, she has noticed unexpected interest from overseas. “We get a lot of inquiries from China, which I did not expect,” she explained.
Christian Koehl Germany
Slow trading keeps European HRC prices flat; hopes for Q1 rebound linger
The HRC market in Europe was quiet on Friday, with prices seen as broadly flat and still way below producers’ target levels.
Notably, for HRC with lead times in the first quarter 2025, most offers have been ranging between €600 ($646) per tonne and €620 per tonne ex-works, sources said.
At the same time, for December lead times, it was still possible to achieve €550-570 per tonne ex-works with some suppliers, Fastmarkets heard.
“The order book situation at mills has improved somewhat in the past several weeks, but we are far away from booming [demand],” a mill source said.
“Stocks [of HRC] are low, but they are sufficient for the subdued demand [from the end-user side],” a buyer said.
A steel-service center (SSC) source said that shipments from SSCs to end users fell by around 30% year on year in September-October.
At the same time, the effect of trade defense measures, applied in the market in the third quarter 2024, was much less severe than had been expected.
“When new safeguards were applied [in July 2024] and anti-dumping against four countries started [in August 2024], we still had significant tonnages [of HRC] in the pipeline – whether shipped, or expected to be shipped, or sitting in ports. It will take the market some time, maybe up to January-February 2025, to clear this volume,” a buyer in Germany said.
“The first quarter [of 2025] might be a bit early [for HRC prices to recover], but [later in the year] we will see better prices, in view of the reduced imports and reduced availability,” another buyer said.
Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €558.75 per tonne on Friday, down by €1.96 per tonne from €560.71 per tonne on Thursday.
The index was up by €1.25 per tonne week on week and by €13.37 per tonne month on month.
In Southern Europe, Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Italy at €552.50 per tonne on Friday, unchanged from the previous day.
The Italian index was down by €5.00 per tonne week on week, but up by €12.50 per tonne month on month.
Italian suppliers offered HRC with lead times of five to six weeks at €570-580 per tonne delivered, which nets back to €560-570 per tonne ex-works, according to sources.
Buyer estimations were lower, at €540-550 per tonne ex-works, Fastmarkets heard.
For first-quarter delivery HRC, price ideas were around €620 per tonne delivered (€610 per tonne ex-works).
It remains to be seen whether such prices can be accepted by buyers.
According to buyers, slow consumption and fierce competition downstream will make such an increase challenging.
But on the other hand, limited imports and lower offered HRC volumes could support a price rebound in the first quarter of 2025, sources said.
Import HRC offers remain uncompetitive in Europe, Fastmarkets heard.
HRC from Turkey was on offer at €580-600 per tonne CFR to Italy, including the anti-dumping duty, while offers from Asia came in at €550-570 per tonne CFR.
EUROMETAL Steel Trade Day: Coils price increase highly unlikely before Q2 2025
One of the main topics widely discussed at EUROMETAL’s Steel Trade day conference, held in Dusseldorf on November 5, was the persistent imbalance between demand and supply that has troubled the European steel coils market for months. This imbalance has significantly hindered domestic suppliers’ attempts to raise prices.
The mismatch between demand and supply largely stems from weak demand in consumer industries, as supply levels have remained fairly steady in recent years, particularly within the EU, Metal Expert has learnt at the conference. “The volumes going out of service centers’ doors directly to end users, I think, went down quite a bit. I would estimate that around 30%, depending on the area,” noted Maruan El Daghma, Managing Director at Primex Steel Trading, during a panel discussion.
Declining consumption, both real and apparent, reflects ongoing economic uncertainties and weaknesses in both global and EU markets. The EU’s protectionist policies have also negatively impacted the distribution sector. “If the cost side is unpredictable, then you are of course cutting your inventory to a minimum to remain flexible. And I think that’s what we have seen over the last 12 months. A lot of importers have been hit hard by the safeguard duties and I think that the risk appetite has gone down,” explained Alexander Julius, Managing Director at Macrometal. Though some level of imports continues, distributors are “super cautious that the cost base does not exceed the level where you’re going into deep losses,” he added.
All panelists agreed that no price improvement is possible until the end of the year, considering the current low level of demand. Looking to next year, perspectives varied. “The long-term logic of the market would dictate too much supply, too little demand, not enough investment to persuade people to spend money, lots of fear around massive amounts of world issues. So I would say it’s going to be a struggle to get pricing up,” said Julian Verden, Managing Director for Europe at Stemcor.
Tayfun Iseri, Chairman of Yisad, also noted that the core issue is low demand, not oversupply. “Supply has been pretty much stable [globally over the last few years]. If China continues to supply over 100 million t a year, I just cannot see the prices going up unless the demand picks up. And for the next six months, I just cannot see the demand going up,” he said.
Conference participants identified only two potential drivers of a price increase in European coils: reduced HRC import availability due to safeguard measures and the ongoing anti-dumping investigation targeting Egypt, Vietnam, India, and Japan, combined with lower EU interest rates.
“The first quarter might be a bit early, but I think in the further development of the year hopes are for a better recovery of the market in view of reduced imports. And that means also reduced availability. But again, I think the first quarter may be a little bit too early,” Julius said.
“I don’t think that the demand will be extraordinary at this point in time. But we should also not underestimate the impact of a lower cost of money entering 2025. We already have 0.75% lower cost of money right now. We’re going to have another interest rate cut pretty soon. Realistically, money is going to cost 1% less. After around two and a half years of destocking, I think that a cautiously optimistic view could be seen: not great demand, but good for automotive manufacturing. It should be slightly better than in 2024,” added Marco Micciche, CEO of Eusider Trading.
Lilit Papoian
Poland must fight for its steel plate production potential
Yes, this market by 90% depends on imports. We are talking about the steel plate market in Poland. And this market is quite large – about 1 million per year in 2015-2023. But, surprisingly, local production is in crisis, and two out of three manufacturers have gone bankrupt in the last 10 years.
Steel plate is a sheet steel rolled product, typically with a thickness of more than 3 mm. Large consumers of plate are construction, renewables, shipbuilding and the defense sector. And for the latter, dependence on imports is unacceptable, since it weakens the country’s resilience.
There are three plate producers in Poland: Huta Czestochowa, Walcownia Blach Batory (WBB) of the Weglokoks group and the HSJ plant owned by the Cognor Group. Local plate production volumes fell by 50% from 625,000 tons in 2013 to 300,000 tons in 2023. This was due to problems at the largest producer, Huta Czestochowa, which has a capacity of up to 1 mln tons of plate.
The total capacity of the other two plants is ×3.5 times less – only 210 thousand tons. Judging by plate production volumes in Poland, according to WSA, WBB and HSJ are utilized quite highly. What does this mean? The market is starting to import, despite the presence of a local idled plant in Czestochowa. In other words, the potential of local production is not used.
The key sources of plate imports to Poland are Italy, the Czech Republic, Germany and Denmark. Imports from Italy (NLMK Verona), the Czech Republic (Vitkovice Steel) and Denmark (Dansteel) are products made from slabs of Russian origin. We can also add 5% of imports from Belgium (NLMK Clabecq). As a result, we`ve got that 47% of plate imports in Poland depend on Russia or 44% of the entire market. This is unacceptable in conditions when Poland is actively strengthening its defense to repel possible Russian aggression.
The EU’s overly soft policy has made it possible for Russian steel products to dominate, with high quotas on Russian slab imports, with postponed ban until 2028. Russian imports distort competition, putting pressure on flats prices in the EU in a weak market. In an effort to preserve jobs at Russian-owned plants in Italy and Belgium, the European Commission discriminates against jobs in Poland. The plate market is a good example.
In such circumstances, it is important to preserve production and human potential and resume full-scale operations at Huta Czestochowa, which is in permanent bankruptcy.
Last week, the Court approved the bankruptcy decision of the plant, the arbitration manager is looking for applicants to lease the assets, and in the future to sell the plant.
The domestic Weglokoks group, the German trader Steel Mont, and the Metinvest group, which has major assets in Ukraine, are named as applicants for Huta Czestochowa. Liberty Steel, which managed the plant in 2020-2023, showed active interest, but proved to be an ineffective investor.
Attracting an effective investor to breathe new life into the company, as there is enough potential in the Polish market. But there are also a number of challenges. This is the case when a number of problems pass to the new owner along with the asset. This increases the requirements for the future investor.
Given the “rent-for-sale” scheme, in order for Huta Czestochowa to start operating successfully, it is important to ensure working capital, sales and capacity utilization at the first stage. Sounds good, but difficult to implement. How to compete with products made from Russian semi-finished products? How to ensure the competitiveness of EAF production with a 25% higher electricity price in Poland compared to Germany? At the second stage, it is necessary to ensure investment, since the plant during the period of permanent bankruptcy clearly faced underinvestment in both maintenance and development projects.
With all due respect to the trading company’s business, Steel Mont, it is unlikely that a company with revenues of €100 million will be able to ensure the sustainability of Huta Czestochowa’s business. In addition, the company doesn`t operate a steel production business.
The Polish state-owned Weglokoks Group generates most of its business from coal mining and trading. But Weglokoks is already present in the plate market currently, operating a plate mill in Huta Batory with a capacity of 150 thousand tons. In other words, Huta Czestochowa’s capacity is large compared to the current scale of Weglokoks’ steel business.
Metinvest is trying to regain its position in the European steel market after losing two large plants in Mariupol. The company knows the plate market in Europe well, since before the war Ukraine was the largest supplier to the EU. In other words, it can be expected that Metinvest will be able to establish plate exports from Poland. Potentially, there is another synergy there. Huta Czestochowa could supply plate to the Ukrainian market, which reached 200 thousand tons per year in 2023-2024 and is supplied entirely by imports. In this way, the issue of sales can be resolved and the capacity of the plant in Czestochowa can be utilized in the first stage.
The scale of Metinvest’s business implies big numbers. EBITDA of Metinvest amounted to $861 mln even in the crisis year 2023, while CAPEX – was $283 mln. This leaves no doubt about the company’s ability to provide investments for Huta Czestochowa.
But the investor’s efforts may not be enough. Poland also needs to review its industrial policy, against the backdrop of the systemically worsening positions of all local steelmakers and growing imports. For example, we see a decrease in the production of flat steel at ArcelorMittal Group enterprises, the sale of the Polish asset of Celsa (Huta Ostrowiec).
The Polish authorities will have to make a difficult choice without the right to make a mistake. This will be the third attempt to revive the plant. The likelihood of normalizing the plant’s operations decreases with each attempt.
