The primary challenge facing the European end-user steel industry is weak demand rather than costs, with regulatory uncertainty further exacerbating market fragility, according to participants at a roundtable discussion during the EUROMETAL Southern European Meeting in Milan on Feb. 25, which was attended by Platts, part of S&P Global Energy.
During a session titled ‘The new normal of global economy while Europe loses track,’ panelists emphasized that trade defenses alone would not restore competitiveness unless they are accompanied by initiatives to stimulate consumption and strengthen industrial ecosystems.
The rapid pace at which the steel industry has been required to shift toward decarbonization was also a significant challenge, according to the participants.
Fernando Espada of Tata Steel said that the market “is trying to find a new balance,” noting that the previous momentum for a green deal and decarbonization has shifted.
“The problem with the entire legislation is the pace of it,” Espada said, before drawing a comparison between the adoption of green steel and the slower-than-expected growth of the electric vehicle market in Europe.
“In 2022, everyone thought we had to embrace green policies. But only for the first time, now I have two big projects on the table that are real green steel projects with significant volumes. The transition is taking place, just at a different speed than what the EC (European Commission) wants.”
Manufacturing shift
Emilio Rossi of EconPartners and Oxford Economics said the decline in manufacturing’s share of gross domestic product was not limited to Western economies but was also evident in China, highlighting a broader structural transformation. “Manufacturing and steel depend increasingly on services, such as logistics, financing and funding,” Rossi said, emphasizing that industrial competitiveness now hinges on the strength of supporting service networks.
Espada said steel serves as the “backbone of the economy,” adding that the EC has started to acknowledge that industrial policy “cannot be unilateral” and must align with global developments.
The immediate challenge was weak demand, as buyers have been holding off until there is clarity on revised safeguard measures.
“Once there is clarity, the market will reorganize itself,” he said, noting that suppliers from Taiwan, South Korea and Japan were already preparing competitive offers.
Platts assessed domestic hot-rolled coil in Northern Europe at Eur670/mt ex-works Ruhr on Feb. 26, and in Southern Europe at Eur665/mt ex-works Italy, both stable day over day.
Platts assessed imported HRC in Northern Europe at Eur515/mt CIF Antwerp on Feb. 26, and in Southern Europe at Eur505/mt CIF, both unchanged day over day.
Author: Devbrat Saha, Charles Thompson, Annalisa Villa
