Inflation could be 2022’s big challenge: Kallanish conference

Apart from issues that are proprietary to the steel business, like price fluctuation and supply shortages, inflation and financing problems could be the biggest challenges going forward, said speakers at the Kallanish Flat Steel 2021 conference.

Asked what he considers the biggest challenge in the near future, Alessandro Sciamarelli of Eurofer replied he is afraid that 2022 could see “another shock in monetary policy”.

He was supported by Francois-David Martino, chief executive of German steel service centre Becker Stahl SSC, who stated that “inflation is the risk we may face next year.” He added: “High prices are good for employment, but may kill demand.” In the steel chain, inflation has not arrived at the consumer level, but it will do so in January when carmakers issue new price lists, he pointed out at this week’s event.

One effect on steel trade could occur further upstream, Martino believes. If the EU is not tackling inflation, it will have to ease safeguard measures against imports, to open the doors to alternatives, if domestic prices get out of reach, he suggested.

He also noted that it is difficult for many companies to finance the high prices and the capital tied up in high stock levels. His firm is therefore extremely careful about the credit lines of customers and prefers to work with customers it has known for years.

Fernando Espada of distributors federation EUROMETAL did not quite agree in this regard, pointing to the low interest rates which facilitate easy financing. “Some companies have problems because they had problems even before Covid-19,” he said. However, he expressed understanding for the uncertainty among many steel consumers, who “simply stop buying because they cannot finance it anymore”.

Christian Koehl Germany