The outlook for the European steel distribution sector is not positive due to the current market conditions, according to panellists at the Kallanish Global Flat Steel 2025 conference in Istanbul.
“We are concerned about the [outlook] for our sector. We see prices and our profit margins going down from the beginning of 2024; at the same time, we are required to feed the market with quality steel and be competitive,” said Mario Borsese, general director of Swiss steel distributor Trasteel International. “In the short term, the big question is how the regulatory changes in Europe will function.”
According to him, the negative sentiment on China is not entirely deserved. “They export a lot of steel, but these large volumes are not forcibly accepted by the Brazilian or Turkish markets, for example. They have been offered material, and they have accepted it freely. It’s a question of supply and demand,” he explained.
Borsese confirmed that inventories at centres are reducing from four months a few years ago to one month today. “It’s a question of perspective, particularly in Europe. Since the war between Russia and Ukraine, there is a lack of confidence in the market, so it’s not just Chinese exports,” he observed.
“For example, we can order material from ArcelorMittal with a maximum delivery time of two months since all are awaiting market changes. So, our activity is limited and we can’t keep stocks,” he noted.
The sector needs to see an increase in industry confidence, which is likely to come with the end of the Russia-Ukraine conflict, according to Steven Vercammen, expert at McKinsey.
“The fundamental question is whether … traders remain competitive in a global market where costs are going up,” he said.
“We are starting to think we have reached a point where steel prices are going to start to reflect EU trade policy. I think competitiveness depends very much on how you position the cost structure, CBAM, etc, that differentiate us from other parts of the world,” he concluded.
Vercammen believes that trade policies do not directly influence the price of steel and sees the creation of demand as essential.
Chinese producers, who enjoyed solid profits of around $30/tonne during the first nine months of the year, are now seeing margins fall to $10-15/t, according to Yasin Kanbur of Hangzhou, general manager Middle East office, CIEC International.
“Chinese producers are ready to sacrifice profits in order to survive in the global arena,” he noted, adding that despite facing around 155 anti-dumping cases, China has achieved historically high steel export volumes this year.
Amid China’s expected 2025 GDP growth at 4.2% versus a steel demand contraction of 2%, prices will be more pressured next year, according to Kanbur. His expectations for the Turkish steel market are not optimistic either.
Unlike China, European steel prices are expected to rise, although short-term downward pressure may come from position cargoes, said Jérôme Waterkeyn, chief executive of SteelForce Group.
Waterkeyn said there is an improvement in African and Latin American demand and in the niche business, where you can differentiate yourself and build long-term value. He noted India is booming. “Indian mills are operating at 15-20% margins while Chinese margins barely reach 5%,” he said.
He added that CBAM is creating uncertainty and will lead to certain inflation in Europe. Waterkeyn also warned that many do not want to invest in the EU as investors seek stability.
Todor Kirkov Bulgaria , Burcak Alpman Türkiye
