Europe’s steel market recovery could start in June: Marcegaglia

European steel consumption could start a slow recovery in June, Antonio Marcegaglia, CEO of Marcegaglia Group, the world’s largest welded tube producer and one of the world’s largest steel re-rollers, told S&P Global Platts Friday.

“It is likely that we will see a restart in the demand triggered by restoking and sustained by the European mills cuts and EU imports duties politics” Antonio Marcegaglia said.

“As production is getting rebalanced with demand, I think European prices are close to the bottom. Positive signs are coming from the recovery of the raw materials prices and from the Chinese steel prices increases. So I expect a small technical rebound also in the European prices,” he said, stressing pre-coronavirus levels were a long way off.

In Europe, HRC prices were near a four-year low. The Platts HRC index was Eur413.50/mt ($460/mt) ex-works Ruhr, and Marcegaglia saw a gradual rebound of Eur20-30/mt shortly.

Talking about Marcegaglia Group, the CEO said year started well but volumes dropped from March due to the coronavirus outbreak.

In line with most other steel companies, from March saw a difficult second quarter and a better end to the year, leading to a fall in 2020 turnover of around 15% to Eur4.5 billion.

Full-year volume, meanwhile, was expected to fall around 10%-15% to 5.2 million mt of steel products. Including Palini and Bertoli, the 380,000 mt plate producer acquired in November from Evraz, volume will be down about 10%.

“We managed to integrate Palini and Bertoli well with the rest of the company. Due to COVID-19, the company stopped production for three weeks. Overall as a group, we produced 10%-12% less volume in March year on year and down by 30%-35% in April year on year, after a positive January and February,” Antonio Marcegaglia said.

M&A possibilities

Antonio Marcegaglia said the company is still interested in buying special steel producer Terni AST.

ThyssenKrupp, the owner of Terni, said on a May 18 earnings call said that Terni was back on the market. ThyssenKrupp also said it was seeking partners for its steel unit again since the slump in demand caused by the coronavirus pandemic will further increase the surplus capacity in the market.

In 2018 following a restructuring of ThyssenKrupp Materials, Terni became one of the company’s core assets and was withdrawn from sale.

Marcegaglia, one of Terni’s main stainless customers, would be a good fit in terms of commercial and sales synergies, industries sources have said.

Marcegaglia produces 500,000 mt of stainless steel products a year with a third of the stainless coils it buys from Terni. If Marcegaglia buys Terni, the company will not only have a primary productions but will increase its stainless market production.

Antonio Marcegaglia said the company was on track overall to build its own power plants in Ravenna (20 MW) and Gazoldo (30 MW) to increase its economic sustainability, stabilizing and optimizing the production costs by using energy from renewable sources. Although the process has been slowed by COVID-19, the plants were expected to become operational at the beginning of 2022.

— Annalisa Villa