Marcegaglia sees 2019 better than overall sentiment

Marcegaglia, the world’s largest welded tube producer and one of the world’s largest steel re-rollers, expects volume to rise around 2% this year but is cautious on its EBITDA outlook amid tighter margins due to higher raw materials costs and a slowdown in demand.

“Due to uncertainty, buyers are more cautious … In some sectors such as automotive demand is less — but the market fundamentals are better than the overall sentiment,” Marcegaglia CEO Antonio Marcegaglia told S&P Global Platts on the sidelines of a conference in Milan.

“If we look at Q1 of this year, volumes went up by 2.5% to 1.5 million mt of finished products as well as the turnover registered an increment of 2.1% with respect to Q1 2018 that, we should remember, was a good year,” Marcegaglia said.

As a consequence, steel producers have been pushing for price increases.

Last year unlisted Marcegaglia — which operates 21 steel plants worldwide — saw output rise to 5.28 million mt, with sales up 6.3% to around Eur5 billion ($5.6 billion), Marcegaglia said. Net income rose 48% to Eur97 million.

“Considering the good 2018 results and the still overall positive 2019, we are planning investments for this year of Eur120 million from the Eur40-50 million last year. We will use the investment to expand our cold line in Ravenna and we will be more focus to develop our quality rather than expand our production capacity,” Marcegaglia said.

In Ravenna, the company will install a two-stand reversing cold mill of the compact cold mill (CCM) type with annual capacity of 550,000 mt/year.

Marcegaglia said that if German steel producer Thyssenkrupp were to put Italian steel plant Terni back on sale, he was still interested. In 2018, Marcegaglia wanted to buy the company but Thyssenkrupp took it off the market following the restructuring of Thyssenkrupp Materials to help with proposed merger of the steel divisions of Tata Europe and Thyssenkrupp. However, that merger has had to be canceled.

Marcegaglia also said the company sold its Chinese tube mill to a domestic buyer.