Europe risks becoming uncompetitive due to overcapacity and lack of investment, CMC president Peter Matt said at the Danieli “Innovaction” Meeting in Udine last week.
Matt believes there is some 700 million tonnes/year of global overcapacity. Although China accounts for a large portion of this, other countries are also contributing. Europe needs to rationalise its output and avoid being invaded by external capacity. The continent needs to create a level playing field, as steelmakers are failing to generate good returns.
“In Poland, today, we know we have low-cost operations and yet we cannot generate a good return because of the capacity challenges in the industry,” Matt observed at the event attended by Kallanish.
The EU needs an industry “that is sound for the long term, that attracts capital and makes money want to come to it … I think the US is a good example of what can happen with levelling the playfield with 232 … Prices have come up for steel and companies are generating their returns, companies, including our own, are investing in the business and all of a sudden you have natural capital coming to this industry and making it strong, as opposed to many other places in the world where you see the industry deteriorating because of the lack of investments and because of poor returns,” Matt concluded.
Emirates Steel chief project officer Hassan Shashaa had a different view on overcapacity. Worldsteel says global production will increase by 1.7% this year to around 1.8 billion tonnes and it will continue to grow. “Is this overcapacity?” Shashaa asked. “Overcapacity will always be there and I don’t think we need to be worried about it … When you look at capacity utilisation, the world never used 100% of its assets. Capacity utilisation has always varied between 75-85%.”
“In China alone, they have 1.2 billion tonnes of capacity but they are rarely producing 900 million … The world will continue to grow. India is now growing at 8% per year. They’re planning to add 300 million tonnes steel capacity over the next 20 years … The world is not going to stop growing and overcapacity has always been there,” Shashaa commented.
CMC Poland’s performance has slumped this year. The steelmaker saw steel shipments plummet 37% on-year in the second fiscal quarter through February 2024 to 275,000 short tons. Merchant bar and other product sales fell 17% to 211,000st, while rebar was down a hefty 65% to only 64,000st. Meanwhile, Emirates Steel is eyeing 15m t/y of DRI capacity in Abu Dhabi and aims to increase steelmaking capacity to 8m t/y (see separate article).
Natalia Capra France
