“In terms of activity, I think it has been a good year, but this last part of 2019 has been very complicated”, said Fernando Espada, president of the European steel distributors association EUROMETAL, talking about the situation in the EU distribution sector.
Interviewed by SteelOrbis on the sidelines of the EUROMETAL SSC Regional Meeting Southern Europe held lately in Milan, Mr. Espada pointed out that in Germany in particular the current year has been more negative than elsewhere, mainly due to the weakness of the automotive sector.
“But looking at car registrations in the EU-28 in the first ten months of the year, the figure is only down by about one percent compared to the same period in 2018,” he commented, adding, “Therefore, I think that the weakness of the sector has more to do with inventory management along the supply chain and with exports by Germany to third countries.”
In other European countries, such as France and Spain, the car sector has not showed such a negative performance, he noted. However, he continued, “In Spain, where an even more chaotic picture has emerged from the latest elections, political uncertainty is having a negative impact on investments and decision-making processes.”
Speaking of Italy and the Ilva crisis in particular, the EUROMETAL president defined the Taranto-based steelmaker as “a very important actor which has always determined prices in Europe” and has always been a significant player in terms of price competitiveness, being able to offer a good quality product.
He defined the Italian market as the most dynamic in Europe. “It has the fastest and most responsive players who are open to any option,” he explained. “I have always said that earthquakes have their epicenter in Italy and that their expanding wave arrives in Spain and then reaches Germany via France,” he added.
According to Espada, a possible closure of Ilva would be “a very great loss”. However, he went to say he is “sure that the Italian industry is prepared to react quickly to whatever is happening.” Problems could occur more in the short term, because “in the long term, Ilva’s production capacity could be replaced by imports from other countries,” Espada continued, adding that “once again the Italian industry will show how flexible and quick it is to react to changes.”
During the EUROMETAL Meeting, representatives of European steel service centers claimed to be prepared to face a number of potential scenarios, and said they were confident they would be able to react and adapt quickly to any changes on the supply side. Many agreed that importing coils might eventually remain the sole viable solution to cope with supply shortages in the EU.
Reflecting the EUROMETAL president’s view of the resilience of the steel distribution system in Italy, they pointed out that, for example, shipments by Italian service centers dropped by only 2.7 percent year on year in the first nine months of 2019.