Marcegaglia sees demand recovery, positive sentiment returning

The European steel sector should recover most consumption lost as a consequence of the global pandemic, according to Marcegaglia chairman and chief executive Antonio Marcegaglia.

His opinion is in contrast to some analysts’ belief that steel demand may not fully recover to pre‐Covid-19 levels, with Europe standing to lose some 10 million tonnes/year.

This year, steel demand has been severely hit worldwide, as a consequence of the contraction of the main steel-using sectors. China and Turkey have been spared, however. “In general, we could say now that the overall impact was less negative than originally expected,” Marcegaglia said at the Kallanish Europe Steel Markets 2020 virtual conference this week.

“Both Q1 and Q4 were surprisingly good in demand and price… The steel sector might conclude this year in terms of margins, prices and sentiment much better than what was expected only a few months ago,” Marcegaglia continued. Positive sentiment has returned, he added.

In view of European steelmakers’ strong lobbying and restructuring challenges, Marcegaglia also expects a further decrease in imports into the region. Protectionist measures have been growing in the last decade globally, and the Trump administration further emphasised this trend.

In Europe, together with recently added import duties and the safeguard quotas, other measures, such as a carbon tax and scrap export tax, aimed at dealing with environmental issues may also be used to limit imports.

The pandemic crisis has somewhat changed the landscape of the global steel industry, which will see further restructuring and consolidation throughout the supply chain. Governments might have a growing role in the steel sector in Italy, Germany and possibly even in the liberal UK. This however may cause potential market distortions, Marcegaglia warned.